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The Mumbai-based Welspun group is believed to be in talks to acquire Remi Metals Gujarat, an integrated steel and seamless pipe maker, from the Saraf family.
Sources close to the development said the proposed acquisition fits into the scheme of $1-billion Welspun group, which is a market leader in the pipe business. They said Welspun is also in the process of finalising plans to market pipes of Remi Metals to which it supplies DRI (direct reduced iron) or crude steel even before the acquisition. Officials at both the companies confirmed the plans to market finished products of Remi by Welspun. On the proposed acquisition of Remi, an official at Welspun said: “We keep on looking at growth opportunities in all our verticals of businesses across the globe.” A Remi Metals executive said, “It is not correct at the moment.” Sources said Remi Metals, a BIFR company, has started discussions with IDBI, the operating agency responsible for implementation of the revival scheme, as to how Welspun could acquire the company by clearing off its financial obligations to them. Remi Metals’ total outstanding to banks stands over Rs 400 crore, against its last year’s gross sales of Rs 235 crore. At Friday’s closing price of the stock at Rs 15.9, the company is valued at Rs 200.38 crore. “It will take a while for the BIFR to clear the deal,” one of the sources said. The deal, when fructifies, will be one of the rare cases of change in management control of an ailing company from the BIFR purview. The acquisition of the management control would require the Welspun group to come out with a mandatory 20% open offer for retail shareholders of Remi. The non-promoter shareholding is 37.5%. The Saraf family holds 62.5% in Remi Metals. Chiranjilal Saraf started manufacturing of fractional motors and laboratory stirrers under the aegis of Rajendra Electric Motor Industries in 1960 and the group was later christened as Remi (abbreviation of the company). Remi Metals is the flagship company of the group with an integrated steel making capacity of 140,000 tonne per annum and a seamless pipe making capacity of 50,000 TPA. In addition to pipe making, Welspun is also into terry towels and yarns. Its two arms — Welspun Gujarat Stahl Rohren and Welspun Power & Steel — are into the pipe and steel businesses, respectively. Welspun India is the textiles outfit of the group. The group, which has presence in 50 countries, aims to scale up its turnover to Rs 9,000 crore in two years.
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| Source: Economic Times |