Acquisition to cost Rs 150 crore
State-owned KIOCL Ltd, an exporter of iron ore pellets, is all set to acquire Hospet-based Tungabhadra Steel Products Ltd (TSPL), a sick PSU engaged in the business of structural fabrication, for an estimated cost of Rs 150 crore.
K Ranganath, chairman and managing director, KIOCL, said, “The department of heavy industries, government of India, has approached us for acquisition of TSPL which has a liability of Rs 245 crore. We have conducted the due diligence and informed the ministry that we are ready to buy out the company provided the balance sheet of the company is cleaned up.”
He said, acquisition of TSPL would be in favour of KIOCL as the company is looking for a presence in north Karnataka. “The acquisition of TSPL will give us a presence in north Karnataka as we are looking to establish our steel plant there. It will also help us source steel structures from this company for our future requirements,” he told Business Standard.
Presently, TSPL has 88 acres at Hospet, which can be gainfully utilised in case the mining lease for the Ramanadurga iron ore deposit is obtained by KIOCL, he said.
TSPL has a mini hydel plant, which generates 5.5 million units of power per year. It has 100 employees in its rolls, which have not been given wage rise since 1992.
Ranganath said KIOCL was ready to pay wage arrears to the employees of TSPL from the day of the acquisition. KIOCL has asked the government to waive off TSPL’s loan amounting to Rs 227 crore and repay another Rs 18 crore loan taken from State Bank of India.
KIOCL has a cash reserve of Rs 1,200 crore and it aims to acquire TSPL with its own funds.
TSPL was incorporated in 1960 by the state government of then Mysore and Andhra Pradesh with a purpose of fabricating steel structures like gates and hoists for building Tungabhadra dam at Hospet. Presently, the company is supplying steel structures to power and irrigation projects. BHEL and SAIL are among its customers.
