Electrosteel Castings, the country's largest ductile iron maker, will offer one equity share in exchange of 25 shares of Calcutta Steel Company, which is being merged with it. Consultancy firm Ernst & Young has fixed the 1:25 swap ratio.
Electrosteel Castings director and secretary S Y Rajagopalan said the company's equity capital would be enhanced by a meager 4 lakh shares after the merger. Calcutta Steel's equity share capital is Rs 1 crore only.
The news that Calcutta Steel would be merged with Electrosteel had been in circulation ever since the Rs 557-crore ductile iron maker acquired the decade-long closed firm last year.
Post-acquisition, Electrosteel would invest Rs 20 crore for installation of machinery required for manufacturing state-of-the-art pipe fittings in the Calcutta Steel premises. It will have a 50,000-tonne capacity for pipe fittings and allied products annually.
Rajagopalan said the Rs 8 crore project for installing pipe fitting machinery at Calcutta Steel was at the final stage and commercial production would begin from the next month.
Electrosteel is also zeroing in on other closed units in the vicinity of its Khardah plant, near Kolkata, provided the target company's business is in line with its core activities.
Obviously, Electrosteel will seek expert opinion before finalising the acquisition of a closed unit, as it had done prior to the takeover of Calcutta Steel.
Electrosteel has just invested Rs 50 crore for setting up a small diameter ductile iron (DI) unit at the Khardah plant.
With this, the company's investment reached Rs 200 crore over the past couple of years which raised the production capacity from 90,000 tonne to 1,70,000 tonne. The small diameter DI pipe unit with a capacity of 50,000 tonne was inaugurated in mid-September.
The pipes have been designed to ensure that they do not contaminate the environment. The plant will manufacture DI pipes of diameters ranging from 80 mm to 300 mm.
The new plant is also equipped with energy optimising furnaces, where the products of combustion are propelled with sequential firing mode through sensors. The entire manufacturing process is remote controlled to manufacture with accuracy.