Kolkata-based Shyam Metalics has completed the takeover procedure of Ramsarup Industries Ltd, another city-based steel company, with an immediate investment of INR 380 crore towards payment to various stakeholders as per the approved resolution plan.
Shyam Metalics intends to resume production at the existing facilities in the next two years, in phases, a company source informed SteelMint. The company had estimated INR 306-crore investment three years back towards working capital. The feasibility of that figure was based on the scenario at that juncture. There has been substantial cost escalation since then. And the current investment amount may double, if required, at a later stage.
“It is difficult to say at this juncture how much the investment will be as we are awaiting the due diligence reports from our technical and financial teams before deciding on the investment,” the source said.
Ramsarup Industries Ltd has been acquired through a special purpose vehicle where 60% is owned by Shyam SEL and Power Ltd, a wholly-owned subsidiary of Shyam Metalics and Energy Ltd and the balance 40% by another West Bengal-based company, Super Smelters Limited.
Existing facilities
Incorporated in July 1979, Ramsarup has facilities across four locations in West Bengal.
At Kharagpur, existing facilities include a 3-lakh tpa a mini blast furnace, 1.6-lakh tpa DRI plant, 150-tpd air separation unit, 9-lakh tpa sinter plant, 6.9 lakh tpa EAF for billet-making and a 20-MW captive power plant.
The Durgapur facility includes a 0.85 lakh tpa steel wire drawing unit. There is a 1.67 lakh tpa TMT rods and wire drawing facility at Shyamnagar while Kalyani houses a 1.97 lakh tpa steel wire unit and a 3.75-MW wind mill is in Dhule.
How synergistic is the acquisition?
- Ramsarup’s Kharagpur facility, which is located on the highway, along with the captive railway siding, offers Shyam Metalics huge logistic advantage.
- The above plant is located in the mineral belt, with the advantage of coal (Ranigunj, Eastern Coalfields), power (DVC) and port (Haldia and Paradip) facilities close by.
Debt-laden Ramsarup sough resolution
It may be recalled, Ramsarup Industries Ltd, unable to pay its creditors, had approached the National Company Law Tribunal (NCLT) under India’s Insolvency & Bankruptcy Code (IBC), 2016 for a resolution process. However, a new regulation in the Corporate Insolvency Resolution Process (CIRP) barred the promoters of the company from coming up with the resolution plan under Section 29A of the IBC.
The takeover procedure thus started from 2018-19 with a consortium of Shyam Sel & Power Ltd and SS Natural Resources Pvt Ltd, part of the Shyam Metalics Group, declared as successful resolution applicants in September 2019. An INR 351-crore upfront payment translated to a 94% haircut for the financial creditors who had an admitted claim of INR 5,853.09 crore in Ramsarup.
Outlook
After further evaluation by the technical team and subject to availability and sourcing of raw materials, Shyam Metalics may go in for further expansion under the Ramsarup umbrella.
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