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Shyam Metalics and Energy Ltd. has bought Mittal Corp. Ltd. for Rs 450 crore in an NCLT-led resolution process. With this acquisition, the company will now enter the stainless steel, wire rod and bar mill segment.
The addition of Mittal Corp. will see the company’s total metals manufacturing capacity expand to 14.45 million tonnes per annum from the current 8.85 MTPA, Brij Bhushan Agarwal, vice chairman and managing director of Shyam Metalics, told BQ Prime.
“Of this, the value-added long steel capacity will increase to 2 MTPA from the present 1.47 MTPA,” he said.
The acquisition will add 1,50,000 tonnes per annum stainless steel, wire rod and bar mill capacities to the company’s current capacity, he said.
According to Agarwal, ferro alloys—a key input material for stainless steel—is extensively produced in their existing factories, and can go as a raw material for specialty steel production after the acquisition of Mittal Corp.
Besides, the government’s mandate to use minimum 20% stainless steel in coastal areas would ensure that there is stable demand for these products in the future, Agarwal said.
Shyam Metalics bought the company in a resolution process led by the National Companies Limited Tribunal. The other contenders for Mittal Corp. included Jindal Steel and Power Ltd. and Rimjhim Ispat.
Mittal Corp. is the company’s third acquisition in the past one year.
As part of its diversification strategy, the company has proposed to further invest Rs 7,500 crore over the next five years in organic and inorganic expansions.
The integrated sponge iron and ferro alloy producer plans to grow the capital expenditure of Rs 10,000 crore in the next five years from the existing plan of Rs 3,950 crore at present. “We have already invested Rs 2,400 crore in the last two years,” Agarwal said.
The new investments will also help the company bet big on exports and expand their geographies to newer markets, which currently stands at 40 plus countries. Exports contributed 16% to the overall business in the September quarter.
The company plans to shift its focus to customers through the B2C space as it expands its network and works on value-added products.
“The past numbers and data suggest that B2C contributed only 17% to the business revenue at the time of listing in 2021,” Agarwal said.
“Our revenue then was around Rs 6,300 crore. The revenue since then is expected to increase to Rs 13,500-14,000 crore in FY23. The B2C contribution is now expected to increase to 40-42%,” Agarwal said.
The company, which is also the largest producer of coal-fired sponge iron in the country, is looking to expand the present capacity of 2.1 mtpa to 3 mtpa.
In the specialty alloy and ferro segment, the company recently commissioned a specialised 14,000 tpa low carbon ferro chrome plant. It is considered to be a great addition for its niche clients.
Over the next six months, the company will boost the pellet manufacturing capacity to 6 mtpa from 3.6 mtpa at present, billet manufacturing capacity to 2 mtpa from 1.47 mtpa and finished steel products to 2 mtpa from 1.47 mtpa.
“The captive power plant capacity will be enhanced to 357 MW from 267 MW at present,” Agarwal said. In FY24 and FY25, the coke oven plant, blast furnace plant and ductile iron plant capacities will be added, Agarwal said.
“Steel is an important product for the DNA of our development economy. This product is not going to get obsolete or replaced,” Agarwal said.
India is the second largest producer of steel in the world and there is lot of demand for steel due to investments in infrastructure development.
“In the long-term, I am very optimistic that the steel growth will remain strong. The kind of price pressures we saw recently was not expected but is part and parcel of the steel business. I am hopeful, going forward, the demand will remain strong,” he said.
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