October 13, 2008

Welspun and Remi Metals in talks– Report

ET, citing unnamed sources, reported that Welspun group is in talks to acquire Gujarat based steel and seamless pipe maker Remi Metals. The report added that Welspun is also in the process of finalizing plans to market pipes of Remi Metals.

The report cited an official at Welspun as saying that “We keep on looking at growth opportunities in all our verticals of businesses across the globe but a Remi Metals executive said that “It is not correct at the moment.”

The Saraf family holds 62.5% in Remi Metals. Mr Chiranjilal Saraf started manufacturing of fractional motors and laboratory stirrers under the aegis of Rajendra Electric Motor Industries in 1960 and the group was later christened as Remi. Remi Metals has steel making capacity of 140,000 tonnes per annum and a seamless pipe making capacity of 50,000 tonnes per annum. Its total outstanding to banks stands over INR 400 crore as against its last year’s gross sales of INR 235 crore.

The deal, if goes through, will be one of the rare cases of change in management control of an ailing company from the BIFR purview. The acquisition of the management control would require the Welspun group to come out with a mandatory 20% open offer for retail shareholders of Remi. The non promoter shareholding is 37.5%.