Kirloskars take over Kolhapur Steel

Pumps manufacturer firm Kirloskar Brothers Ltd (KBL) has taken over the management of the ailing The Kolhapur Steel Ltd (TKSL).

A communication from the company said today Kolhapur Steel will now have a majority of directors who will be nominated by KBL.

The Kolhapur Steel Ltd had run into financial trouble and was under the observation of the Board of Industrial and Financial Reconstruction (BIFR).

Business Standard had reported earlier on June 1 that KBL was preparing to take over the Kolhapur-based castings company for a consideration of about Rs 18 crore. According to an order passed by BIFR on September 10, KBL will pay Rs 14.86 crore in a 'no lien' account, earmarked for paying the dues of TKSL to Shree Suvarna Sahakari Bank Ltd and another creditor.

TKSL, incorporated in 1965, is engaged in the manufacture of alloy steel castings catering to sugar, cement, steel, pumpsôvalves, marine, earth moving and other general engineering industries. The capacity of TKSL steel castings can be used by the KBL to meet its captive demand due to the rise in production as well as to cater to other customers. The share purchase agreement will be executed on the approval of BIFR.

The proposal for the takeover of Kolhapur Steel by KBL was formalised in a memorandum of understanding (MoU) signed late May this year by the company and the members of a consortium of the lender banks of TKSL comprising of the IDBI Bank (formerly United Western Bank), Canara Bank and Pune-based Shree Suvarna Co-operative Bank.

The Rs 22 crore Kolhapur Steel, being a steel foundry, is suitable for Kirloskar Brothers¿ business and offers itself as a readymade addition to its manufacturing capacity which observers feel is vital to sustain the progress mustered by KBL in the last couple of years.

The deal is seen as part of the attempts to recover the dues of the now defunct Shree Suvarna Sahakari Bank Ltd, Pune, which was promoted by Dnyaneshwar Agashe who owns over 90 per cent stake in Kolhapur Steel.