Arjas Steel, an Andhra Pradesh based alloy steel manufacturer, will through the takeover, will have the Modern Steel's heat treatment business and the auto component business.
Speciality steel manufacturer Arjas Steel has signed a definitive agreement to acquire 100% of Chandigarh based Modern Steels, a listed entity, through a slump sale via its wholly-owned subsidiary Arjas Modern Steel, yet to be incorporated.
Arjas Steel, an Andhra Pradesh based alloy steel manufacturer, will through the takeover, will have the Modern Steel’s heat treatment business and the auto component business.
Modern Steel, in an exchange filing, has informed the BSE that its steel business would be handed over to Arjas Steel, a non-listed entity, by the way of a transfer agreement. It expects to complete the process by March 15 next year. The company has received a consideration of Rs 86 crore from Arjas Steel.
Modern Steel, with a 1.5 lakh tonne capacity per annum, registered a turnover of Rs 211.84 crore in 2020 fiscal. Arjas, with a capacity of 3 lakh tonne, has registered a turnover of Rs 1,300 crore in FY 20.
Sridhar Krishnamoorthy, Arjas Steel’s managing director, said, though the company’s subsidiary is going to take over a listed entity, the Arjas subsidiary is not going to get listed after the takeover. Modern will have to get delisted from the exchange and Arjas will only take over its assets.
“The acquisition will allow to focus on component business whilst enabling Arjas to enter in the North Indian markets. Arjas will make gradual investments aiming to stabilise, modernise and expand production at its newly formed subsidiary,” Krishnamoorthy said.
Arjas Steel formerly known as Gerdau Steel India, in its plant at Tadipatri produces special steel bars for automotive, energy, railways and defence application.