Kirloskars to take over Kolhapur Steel

Pumps manufacturer Kirloskar Brothers Ltd has decided to acquire Kolhapur-based steel castings company Kolhapur Steel Ltd for a consideration of approximately Rs 18 crore.

Members of a bankers' consortium comprising the IDBI Bank (formerly United Western Bank), Canara Bank and Pune-based Shree Suvarna Co-operative Bank and representatives of Kirloskar Brothers Ltd signed a memorandum of understanding (MoU) to this effect on Wednesday at Kolhapur.

Sources in Kirloskar Brothers confirmed the signing of the MoU, but declined to offer any details about valuations and how the new acquisition will be accommodated within the group.

"The finer details of the deal are being worked out and a formal announcement will be made in a month's time," a senior functionary in the company told Business Standard.

The Rs 22 crore Kolhapur Steel, being a steel foundry, is suitable for Kirloskar Brothers' business and offers itself as a readymade addition to its manufacturing capacity which observers feel is vital to sustain the progress mustered by KBL in the last couple of years.

The deal is seen as part of attempts to recover the dues of the now defunct Shree Suvarna Sahakari Bank Ltd, Pune, which was promoted by Dnyaneshwar Agashe who owns over 90 per cent of equity stake in Kolhapur Steel.

Agashe, a former member of the Board of Control for Cricket in India and also the chairman of the selection committee, heads the Brihanmaharashtra Group of industries which has diverse business interests including sugar, alcohol, software and hospitality.

The group's dues to the failed Shree Suvarna exceed Rs 100 crore and Agashe has been selling off the group's assets to repay the bank.

Administrator of Shree Suvarna Sahakari Bank Mukund Ghaisas told Business Standard that Kirloskar Brothers will pay out the total dues of the bank amounting to about Rs 18 crore.

"The other two members of the consortium "" Canara Bank and IDBI Bank "" have agreed to the proposal and will continue as Kolhapur Steel's financing institutions," he said.

The deal "" drafted according to the BIFR guidelines - is expected to be cleared by the board early June. Kolhapur Steel Ltd has been referred to the Bureau of Industrial and Financial Reconstruction (BIFR) and is presently operating as per a revival package approved by BIFR.