Kirloskar Ferrous Industries Ltd, the pig iron and iron castings-based arm of the Kirloskar Group of Companies, has agreed to acquire a plant operated by VSL Steels Ltd for a cash consideration of Rs 135 crore ($18.4 million).
In a stock-exchange filing, the Koppal, Karnataka-based company said the acquisition of the movable and immovable assets of the pig iron facility will help expand its own capacity from 3.91 to 5.41 lakh tonnes per annum.
The transaction with Karnataka-based VSL Steels is expected to be completed in two stages, with both taking place within eighteen months. The unit being acquired is currently non-operational and does not have any turnover, Kirloskar Ferrous said.
According to its website, VSL Steels is part of the VSL Group, whose promoters have interests in the iron ore mining and real estate businesses. The company operates facilities including a blast furnace, blower house, slag granulation facility and a captive power plant.
Shares of Kirloskar Ferrous, meanwhile, were trading 0.98% up at Rs 87.9 apiece at the time of writing this report.
The company’s primary offerings involve pig iron and iron casting, which have applications in sectors such as automotive engineering. The larger Kirloskar Group has interests in manufacturing, energy, power generation, and industrial refrigeration.
Kirloskar Ferrous reported net sales of Rs 1,849.7 crore for the 2019-20 financial year, with net profits of Rs 112.4 crore for the same period. Per stock exchange data, the company has a market capitalisation of Rs 1,211.57 crore.
Its majority owner is another group company, Kirloskar Industries Ltd, which holds around 51.25%.