Hyderabad, Nov 16 (UNI) Arjas Steel (formerly Gerdau Steel India) , a fully integrated special steel plant situated at Tadipatri in Andhra Pradesh, has acquired Punjab-based Modern Steel Ltd, to focus on core auto component business.
Arjas Modern Steel Private Limited, the wholly-owned subsidiary of specialty steel manufacturer Arjas Steel Private Limited, has signed a definitive agreement with Modern Steels Ltd, recently to acquire 100 per cent of all steel, heat treatment and auto component businesses of Modern Steels, the company said in a release here on Monday.
"We are going to invest Rs 125 crore over a year including Rs 86 crore (for acquiring Modern Steel plant assets) for modernisation of the plant," said Sridhar Krishnamoorthy, Managing Director, Arjas Steel.
The deal will be fully consummated when all closing formalities are completed in a couple of months, he said and added that the Modern Steel plant’s current capacity was 1.50 lakh tonnes per annum.
"However, our existing steel plant in Andhra Pradesh , where producing special steel bars for automotive, energy, railways and defence applications, capacity was over 3 lakh tonnes per year and we will invest Rs 200 crore in next two-years to expand its capacity," he informed.
This strategic partnership with Arjas Steel will allow Modern Group to focus on their core auto components business whilst enabling Arjas Steel to add capabilities in North India to serve its customers in a more effective manner, he said.
Both companies aim to cooperate in the longer term in developing new grades and components, as well as offer better products and services, to their automotive customers.
Through gradual investments and efficiency improvements, Arjas Steel aims to stabilise, modernise and expand production at Arjas Modern Steel and expected to cross Rs 2,000 crore revenue by 2022-23 against Rs 1400 crore revenue of Arjas Steel alone.
The deal gives Arjas Steel a manufacturing platform in North India and enables us with additional capabilities to serve our customers in a much more effective manner,” he said.
Our current market share in the special steel segment was between 10-12 per cent against the total market size in the segment was 5 million tonnes, he added.
UNI KNR JW1828