Calcutta, Dec. 28: Stemcor, a world leader in steel trading, will pick up a 4 per cent stake in Calcutta-based Electrosteel Castings Ltd for $25 million, or Rs 100 crore.

In a notice to the Bombay Stock Exchange, Electrosteel said its board today agreed to offer 1.22 crore warrants to Stemcor Metal Ltd, an arm of the UK-based company.

An Electrosteel official said each warrant would be converted into one equity share after 18 months.

Stemcor will pay Rs 81 per warrant. The Electrosteel stock today closed at Rs 86.40, up 4.79 per cent, or Rs 3.95.

“We have been talking to the company for some time. We are happy that it has happened now,” the official said.

Though Stemcor will not have a representative on the board of Electrosteel, which is the largest maker of ductile iron pipes in India, the two players will look at drawing on their respective strengths. “They (Stemcor) may help us in marketing ductile iron pipes and steel in the future,” the official said.

Electrosteel is setting up a 1.3 million tonne steel plant in Jharkhand. It has also got coal and iron ore mines recently.

Earlier this month, the company had made a private placement to a clutch of investors and raised Rs 75 crore.

For the private placement, the shares and warrants were issued at a price of Rs 69.

The $5-billion Stemcor has subsidiary in India — the Steel Corporation of Gujarat — and a venture with Essar Steel. It has also entered into an agreement with Ispat to set up a Rs 900-crore coke oven plant recently.

Electrosteel reported a total income of Rs 317.5 crore for the three months ended September 30, 2007, against Rs 276.1 crore a year ago.