Spanish firm Tubacex has reached an agreement with Prakash Steelage Ltd to acquire 68 per cent stake in the Mumbai-based firm’s seamless stainless steel tube division for Rs 250 crore.
“The acquisition of a majority stake in the seamless stainless steel division of Prakash Steelage is a step towards strengthening our presence in Asia,” Tubacex CEO Jes’s Esmor’s told reporters here.
“Tubacex’s Rs 250-crore investment will come as equity in a new joint venture company, which will be named at a later date, out of which Rs 200 crore will go to the parent company Prakash Steelage to repay debt, while Rs 50 crore will be used for the development of technology in the new joint venture,” Prakash Steelage Executive Director Ashok Seth said.
The Rs 1,000-crore Prakash Steelage has about 250 employees and a turnover of about 25 million euros (Rs 175 crore) in its seamless stainless steel tube division.
“The acquisition is a strategic medium and long-term decision to enable us increase our presence in the market. The joint venture will be mutually beneficial for Tubacex and Prakash Steelage. It is expected to reinforce the growth of the stainless steel seamless tubes and pipes division,” Prakash Steelage Chairman and Managing Director Prakash Kanugo said.
“With this joint venture, Tubacex Prakash will aim to be a leader in the stainless steel tubes and pipes business in India,” he said.
After its recent acquisitions, Tubacex has become the leading manufacturer of seamless stainless steel tubes worldwide and has industrial platforms in Europe, America and Asia.