Rama Steel Tubes acquire multiple stakes in lieu of fresh Equity shares; stock slips ~1%

7 Jul 2022 , 11:51 AM

Rama Steel Tubes Limited (RSTL), one of India's leading manufacturers of Steel Pipes & Tubes and G.l. Pipes, has acquired a 51% stake in M/s Ashoka lnfrasteel, a partnership firm, and a 50% stake in M/s Hagar Mega Mart Pvt. Ltd through the issuance of new company shares.

Rama Steel will acquire the said 51% stake in Ashoka Infrasteel in lieu of fresh equity shares of RSTL to be allotted to the partners. The fair value of the firm has been estimated at Rs550 million.

The acquisition of Ashoka Infrasteel is expected to provide RSTL with access to its vast distribution network across the country and timely market intelligence to aid product innovation and development.

Furthermore, RSTL will subscribe to a fresh issue of Equity shares of Hagar Mega Mart Pvt. Ltd. to the extent of 50% of HMMPL's total shareholding post such issue, thereby making it an associate company.

RSTL will issue such a number of equity shares up to a maximum value of Rs55 million. The fair value of shares of HMMPL has been estimated as Rs40 per share.

The acquisition of HMMPL allows the company to enter a new market segment of sanitary ware, bathroom accessories, faucets, vanities, sinks, and various finishes and varieties drains.

The company has estimated total consideration of up to Rs330 million for expansion initiatives.

At around 11.44 AM, Rama Steel Tubes was seen at Rs388.45, down by 1.07% against its previous close of Rs392.65 on NSE. So far in the day, it hit intraday high and low of Rs397.30 and Rs386 respectively.