Following a global merger of the metallurgical division of Mannesmann Demag group of Germany with the metallurgical division of SMS Demag AG (formerly SMS Schloemann-Siemag AG), the former's 90 per cent shareholding in its Indian subsidiary, Indomag Steel Technology Ltd, is being acquired by SMS Demag.

Indomag was earlier a Kolkata-based joint venture between the Mannesmann group and Voltas Ltd, a Tata group company. Around three years ago, Voltas pulled out of the venture, the sources added.

Mannesmann Demag now has an equity investment of Rs 28.35 crore in the Indian arm, which aggregates to 90 per cent of the company's paid up capital, according to the sources. The balance 10 per cent shareholding is held by Dodsal Ltd.

The Foreign Investment Promotion Board (FIPB) recently considered the proposal and recommended it for consideration and approval by commerce and industry minister Murasoli Maran. The minister has also approved the case, the sources said.

The local joint venture partner, Dodsal Ltd, had conveyed its consent to the proposed transfer of shares. The other stakeholders also approved of the deal. The board of the Indian subsidiary as well as that of SMS India Pvt Ltd also sent a "no-objection" to the FIPB, the sources said.

The company in its application to the government had stated that as per an agreement reached between Mannesmann Demag AG and SMS Demag AG recently, the metallurgical division of the Mannesmann was proposed to be merged with the metallurgical division of SMS Demag. Since Mannesmann was holding a 90 per cent stake in Indomag, it had to be transfered to SMS Demag following the global deal.

Subject to government approval, 28,350,000 equity shares of Rs 10 held by Mannesmann Demag in Indomag Steel Technology will be bought by SMS Demag.