Kolkata-headquartered integrated metal producer, Shyam Metalics and Energy Ltd. (SMEL), has planned a Rs. 7,500 crore CAPEX for the coming 5 years. The company is also in the process of concluding its acquisition of Mittal Corporation Ltd., which will be its second acquisition in the steel sector during 2022.
SMEL Targets Organic & Inorganic Growth, Plans 7,500 Cr. CAPEX for Next 5 Years
In its stock filing dated 21st December 2022, Shyam Metalics stated that the company will be investing Rs. 7,500 crore over the span of 5 years.
Other than the Rs. 7,500 crore CAPEX, the company has already invested Rs. 2,400 crore in the last two years, a part of which was for a recently commissioned Low Carbon Ferro Chrome Plant of 14,000 Metric Tonnes Per Annum (MTPA) capacity at Sambalpur, Odisha. Therefore, the total investment by the company will be about Rs. 10,000 crore by 2027.
This CAPEX is directed towards SMEL’s inorganic and organic growth plans. The company will also be focusing on increasing the geographical reach of its exports.
The planned CAPEX includes an investment of Rs. 5,000 in SMEL’s main plant at Jamuria, West Bengal.
As per the company’s filing, post the planned expansion, its Coal-fired Sponge Iron capacity will grow to about 3 Million MTPA (MMTPA) from the current 2.1 MMTPA.
SMEL’s integrated steel capacity after the expansion will grow to 14.45 MTPA from the existing 8.85 MMTPA. This includes the company’s Long Steel production, which will be increased to 2 MMTPA from the current 1.47 MMTPA.
Shyam Metalics has stated that it will increase Pellet Capacity to 6 MMTPA from the present 3.6 MMTPA, Billet Capacity to 2 MMTPA from 1.47 MMTPA, Sponge Capacity to 2.90 MMTPA from 2.10 MMTPA, and Finished Steel Capacity to 2 MMTPA from 1.47 MMTPA in the coming six months.
The company plans to add a coke oven plant, blast furnace plant and ductile iron plant in FY-24 and FY-25.
Other than this, SMEL may plan to invest in an Iron Ore beneficiation facility in Odisha at its existing plant.
Shyam Metalics to Dilute Promoters’ Holding as per SEBI Norms
SMEL’s promoters hold 88% of the shares in the company. As per Securities and Exchange Board of India (SEBI), promoter holdings of listed companies have been capped at 75%. If promoters hold more than 75% of the shares in a listed company, they are required to bring their holdings down to 75% of less within 3 years from the date of listing.
This means that SMEL promoters need to dilute at least 13% of their shares in compliance with the market norms by 24th June 2024. This dilution will be done by the issue of fresh equity shares, and an offer for the sale of promoters’ shares. The capital thus raised will go towards the company’s aforementioned expansion plans.
Shyam Metalics Expands Steel Portfolio with Recent Acquisitions
SMEL’s Acquisition of Mittal Corp. to Bolster its Position in the Steel Sector
On 21st December 2022, Shyam Metalics stated in a stock filing that it will be completing the acquisition of Indore-based Mittal Corporation Ltd. The company clarified that the matter is currently sub-judice and is expected to resolve in due course.
With the takeover of Mittal Corp., Shyam Metalics will acquire 1,50,000 Tonnes Per Annum (TPA) production capacity of Stainless Steel, Wire Rod and Bar Mill capacity in the state of Madhya Pradesh. The company is already a producer of Ferro-alloys which will be used as raw material for these soon to be acquired facilities.
Commenting on Mittal Corp.’s acquisition, Shyam Metalics Vice-Chairman and Managing Director, Mr. Brij Bhusan Agarwal, said, “Mittal Corp’s acquisition cost is about Rs 450 crore, and we outbid Jindal Stainless, the competitor for the sick asset put under the NCLT resolution process. The acquisition will enable us to foray into stainless steel and special products, such as defence materials”.
SMEL Gains Steel Production Assets by Acquiring Ramasarup Ind.
Shyam Metalics acquired Ramsarup Industries Ltd., a Kolkata-based manufacturer of steel wires, TMT bars and steel, in May 2022 through the Insolvency and Bankruptcy Code (IBC) process.
Ramasarup Industries has facilities in four locations across West Bengal. These include an integrated steel plant at Kharagpur with a 3 lakh Metric Tonnes Per Annum (MTPA) mini blast furnace, 9 lakh MTPA sinter plant, 6.9 lakh MTPA Electric Arc Furnace for billet-making and a 20 MW captive power plant.
SMEL has acquired Steel Wire production facilities at Durgapur and Kalyani of capacities 85,000 MTPA and 1.97 lakh MTPA. Additionally, a TMT rod and wire drawing plant at Shyamnagar with 1.67 lakh MTPA capacity has been acquired from Ramasarup Industries.