Arjas Steel will be purchased by Sandur Manganese for ₹3,000 crore

ADV Partners, an Asia-focused private equity group, and Sandur Manganese & Iron Ores (SMIORE) have reached a deal for the acquisition of Arjas Steel, a special steel maker, for an enterprise value of ₹3,000 crore.

 

The share acquisition agreement states that SMIORE will pay cash to acquire an approximate 81% ownership in Arjas Steel. According to a regulation change, the equity value shall be determined at closure by taking into account customary and pre-agreed modifications to the enterprise value.

After the transaction, Arjas Steel will be held by BAG Holdings, which is controlled by SMIORE promoter Bahirji A. Ghorpade to the tune of around 19.12%. The transaction is contingent upon receiving regulatory clearances and closing within seven months.

This deal facilitates ADV Partners’ departure from Arjas Steel and represents SMIORE’s entry into the production of value-added products and specific steels.

“This purchase offers a forward integration for SMIORE in addition to opening up a number of synergies. SMIORE MD Bahirji A. Ghorpade said, “The acquisition will bring us one step closer to our strategic transition from a merchant miner to an integrated commodity producer.”

With a combined production capacity of 500,000 MT, Arjas is a supplier of steel to the automotive industry. Its two factories are located in Tadipatri, Andhra Pradesh, and Mandi Gobindgarh, Punjab, and are powered by electric arc furnaces. There are 2,500 workers at the firm.

After posting ₹2,368 crore in FY22 and ₹1,561 crore in FY21, Arjas reported a turnover of ₹2,876 crore in FY23.

Over $1.2 billion in assets are managed by independent Asian regional private equity firm ADV Partners. Arjas Steel, Amber Enterprises, Tarsons, Micro Plastics in India, and the SQ Group in Bangladesh are among the companies in the manufacturing sector in which the company has stakes.