Companies

Arjas acquires Modern Steels; gets Punjab plant in ₹86-crore slump sale

V Rishi Kumar Hyderabad | Updated on November 16, 2020

Deal takes Arjas’ specialty steel capacity to 4.5 lakh tonnes

Arjas Modern Steel Pvt Ltd, a wholly owned subsidiary of specialty steel manufacturer Arjas Steel Pvt Ltd, has signed a deal to agree 100 per cent of the steel, heat treatment and auto components businesses of Modern Steels Ltd.

The deal will be completed in two months. Modern Steel’s plant, located in Punjab, has been acquired for ₹86 crore through a slump sale.

The deal is expected to allow  Modern Group to focus on  its core auto components business whilst enabling Arjas Steel to add capabilities in North India. Both companies plan to develop 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.

“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,” said Sridhar Krishnamoorthy, Managing Director, Arjas Steel.

₹125-crore investment

“The new plant provides access to leading automotive companies,” he told BusinessLine. “In all, we expect to invest about ₹125 crore in the acquisition and bringing about some upgradation. With the acquisition of the 150,000 tonnes per annum plant, we will together have a capacity of 4,50,000 tonnes per annum.”

Independent of this development, Arjas Steel plans to continue its investments and growth strategy for its current operations at Tadipatri, Andhra Pradesh, where it operates a  3 lakh tonnes per year integrated plant, producing special steel bars for automotive, energy, railways and defence applications.

Arjas Steel (formerly Gerdau Steel India) is one of the leading manufacturers of alloy steel in the country. It offers various carbon, alloy and micro-alloy steels in various profiles for critical applications in the automotive, energy and other sectors, in rolled, cold finished and heat treated condition.

“We had a turnover of about ₹1500 crore last year and the new plant when fully operational will add about ₹600-800 crore per annum,”  said Krishnamoorthy.

Gerdau  was acquired by  private equity firm ADV in 2018 for $120 million, when the Brazilian firm restructured its global operations.

Published on November 16, 2020

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