Mumbai: Iron ore producer Sesa Goa Ltd has acquired assets of Bellary Steel & Alloys Ltd (BSAL), for Rs220 crore on Tuesday, the company informed the stock exchanges.
Sesa Goa gets access to the upcoming steel plant in Bellary apart from the iron ore belt that the BSAL owned. This acquisition marks Sesa Goa’s entry into steel production.
Assets of BSAL, as part of the liquidation process under SARAESI Act, were up for sale after the consortium of secured lenders decided to recover the debt by selling its upcoming plants and other assets, the company said in its release.
The consortium was led by IFCI Ltd.
Sesa Goa has iron ore mines in the state of Karnataka. The state government had banned the company from exporting the iron ore outside of the state. “This (acquisition) is the best way to capture steel making and helps them utilize the iron ore production,” Bhavesh Chauhan, senior analyst-metals and mining, Angel Broking said.
According to Chauhan, there is still no clarity on whether the environmental and other regulatory clearances are in place for the plant. “We need to watch out for whether how long it will take for the plant to start producing steel,” he added.
This acquisition of the upcoming steel plant of BSAL gives Sesa Goa access to the iron ore rich belt in Karnataka, helps set up additional facility with around 700 acres of freehold land and its proximity to the highways and other resources.
“We have been looking at setting up value addition facilities and this acquisition provides us with an excellent opportunity to leapfrog ahead in that direction,” Sesa Goa’s managing director P. K. Mukerjee said.
Sesa Goa Ltd’s stock was up by 1.56% to Rs262.95 a share at 11:29 am on Bombay Stock Exchange.
With around Rs6,000 crore of cash on books, Sesa Goa posted a revenues of Rs1,696.68 crore for the third quarter ending 31 December. The Company saw its net profit rise to Rs8,439.20 million against Rs6,077.10 million at the end of 31 December 2009.