Essar completes Shree Precoated assets acquisition
Essar Steel has completed the acquisition of steel assets of Shree Precoated Steels Limited. This acquisition will make Essar Steel the most versatile flat steel producer with integrated facilities from heavy plates, hot rolling, cold rolling, galvanizing and colour coating, with a full distribution business with service centres and steel hypermarts. This is only plant in India that uses NIR (near infra red) technology for colour coating which extends the life of the product.
The colour coated products from this plant is well accepted both in the domestic and export market with exports accounting for 80% of its production. The domestic market for colour coated products is growing at over 30% due to increasing urbanization. Essar Steel will utilize its network of service centres and hypermarts as a distribution channel to market the products from this plant.
Commenting on the acquisition, Malay Mukherjee, CEO, Essar Steel said, “going forward, it is important for the steel companies to widen the product base. This acquisition is aimed at achieving that objective. We will be able to capitalize on the synergies offered by this plant through technical expertise of Essar Steel”
The assets that have been acquired include the plant comprising colour coating line (annual capacity 4,00,000 tonnes), cold rolling mill (annual capacity of 6,00,000 tonnes), galvanizing line (annual capacity of 500,000 tonnes) and pickling line (annual capacity 650,000 tonnes). The plant is strategically located at Sanaswadi near Pune, Maharashtra, which is one of the largest steel consuming centre.
The total value of the fixed and current assets acquired is approximately Rs1,200 crore. This is funded through a mix of debt and equity. With this, Essar Steel will have the largest cold rolling capacity (2 million tonnes), the largest colour coating facilities (0.4 million tonnes), galavanising capacity of 1.0 million tonnes and pickiling capacity of 2.2 million tonnes in the country.
The company will now be able to provide end to end service to address the customers’ needs. The acquisition is also expected to support its efforts to increase the share of value added products in its portfolio and fits well in the company’s expansion plans of having manufacturing facilities in different geographies.