Sandur Manganese & Iron Ores Makes Strategic Move to Enter Steel Industry

Sandur Manganese & Iron Ores Limited (SMIORE), a leading company within the Karnataka-based Sandur Group, announced a significant step towards business expansion on April 25, 2024. The Board of Directors approved a strategic acquisition through the purchase of 80% equity share capital of Arjas Steel Private Limited (ASPL).

This move aligns with SMIORE’s long-term business strategy for forward integration. Currently, the company focuses on mining manganese and iron ores, generating power, and manufacturing ferroalloys and coke. The acquisition of ASPL signifies their entry into the steel industry, a key step in their journey towards becoming a national integrated player.

Key Details of the Acquisition

• Share Purchase Agreement: SMIORE entered into a Share Purchase Agreement with ASPL to acquire the 80% stake. The transaction is subject to approval by the Competition Commission of India (CCI). No further governmental or regulatory approvals are required.
• Parallel Investment: Separately, BAG Holdings Private Limited, an entity owned by a promoter of SMIORE, will acquire a ~19.12% stake in ASPL.
• Acquisition Rationale: As part of its strategic growth plan, SMIORE identified inorganic growth through business acquisition as a means to accelerate its transition into steel manufacturing and explore value-added products. This acquisition unlocks potential synergies between SMIORE’s existing operations and ASPL’s expertise in steel production.
• Financial Details: The acquisition will be settled through a cash consideration. ASPL’s enterprise value is estimated at approximately ₹3,000 crore. The final equity value for the 80% stake will be determined based on customary adjustments to the enterprise value at the closing date.
• Timeline: The acquisition process is expected to be completed within seven months, subject to the fulfilment of customary closing conditions outlined in the Share Purchase Agreement.

Looking Ahead

The acquisition of ASPL is a major step forward for SMIORE’s vision of becoming a leading integrated player in the Indian steel industry. This move strengthens their position within the steel value chain and paves the way for further growth and diversification.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.