Bhuwalka Steel Industries Acquires Equity Shares Of Benaka Sponge Iron

Bhuwalka Steel Industries has taken over 299900 equity shares of Rs 100 each at Rs 334 per share in Benaka Sponge Iron, Bellary by way of all cash deal of Rs 10.02 crore. BSIPL is strategically, located in Belagal Village, Bellary, having proximity to iron ore belt yielding logistic advantage. The acquisition will enable the company to have backward integration and have synergy with the operations of the company. BSIPL is an existing, profit making company and its net worth as on 31 March 2007 was Rs 10.02 crore as per the audited balance sheet. BSIPL posted a turnover of Rs 40.21 crore with a PAT of Rs 2.02 crores during 2006-07 and it is estimated to post a turnover of Rs 59 crore with a PAT of about Rs 2.80 crore for the year 2007-08.

Benaka has at present 2 Kilns of coal based sponge iron plant of the capacity of 100 MT per day each. With this takeover, the company will have access to sponge iron to the tune of 60,000 MT per annum. In next phase, the company is planning to generate power through hot gas recovery for captive consumption by the group. Company is planning to enter into green power generation by setting up a power plant with a capacity of 10-12 MW with waste heat as feed stock along with chardust (by-product) and coal.

Presently, Bhuwalka Steel Industries is a secondary steel producer and this acquisition will enable the group to produce steel through primary route by integrating the operations to improve, margins. Company will have linkage for the coal and iron ore, the major raw materials, to substantially improve the profitability in the current year.

The company made this announcement during the trading hours today, 17 April 2008.