Shares of Visa Steel Ltd (VSL) today surged 20 per cent after the company said it will seek shareholders' approval for the merger of its JV firm Visa Bao Ltd (VBL) in an attempt to optimise costs and secure availability of resources for its ferrochrome business.
The stock zoomed 20 per cent to Rs 16.38 - its highest trading permissible limit - for the day on BSE.
On NSE, it soared 19.7 per cent to touch the upper circuit limit of Rs 16.40.
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VBL is a joint venture between VSL and Baosteel of China, with VSL holding 65 per cent stake.
The firm will hold a postal ballot soon to seek shareholders' approval for the proposal and the results are expected next month.
In order to have sustainable growth, it is necessary for any ferrochrome producer to have captive chrome ore mine or a captive power plant, if not both, VSL had said in a regulatory filing yesterday.
"Hence, with a view to achieving competitive advantage to ensure availability of chrome ore and concentrates and optimise the utilisation of the power plant capacity, it is intended to consolidate the ferrochrome business of VSL and VBL by amalgamating VBL with VSL," it added.
Explaining the rationale behind the merger, the firm said at present, VSL has two submerged arc furnaces for production of 60,000 tonnes per annum (TPA) of ferrochrome and has a 75 MW captive power plant, with infrastructure to scale this up to 1.20 lakh TPA.
