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Calcutta, March 29: K.K. Bangur has decided to restructure the operations of Graphite India and GKW by transferring assets and rearranging balance sheets between the firms.
Flagship company Graphite India will acquire the speciality steel business of GKW — Powmex Steels Division. It will issue shares instead of paying in cash for the transaction.
Graphite will offer one equity share of face value Rs 2 each to GKW shareholders for every three ordinary shares of face value Rs 10 held in GKW.
The transaction will also involve a write-down of GKW’s shareholding capital: a GKW shareholder with 100 shares will have only 10 after the reorganisation.
Graphite India chairman K.K. Bangur told The Telegraph that the whittled down equity of GKW would reflect the “true value” of the company after the demerger of Powmex.
“This is a win-win deal for shareholders of both the companies. GKW shareholders are getting a pie in Graphite, which will give a fillip to the high-speed steel business and create wealth,” Bangur said.
The new scheme of arrangement, which will come retrospectively into effect from February 1, 2009, is subject to necessary approvals of the shareholders, regulatory authorities and the sanction of Calcutta High Court.
Located at Titilagarh in Orissa, Powmex is the largest manufacturer of high-speed steels in India. With an installed capacity of 6,750 metric tonnes, it has potential for further expansion.
Bangur said there were plans to increase capacity, but the investment would not be large. “We will remain a niche player,” he said. The division supplies to auto component makers.
Graphite India is the largest manufacturer of graphite electrodes in South Asia with a capacity of 60,000mt in India and 18,000mt in Germany. Graphite electrodes are used in steel mills using electric arc furnaces. The global exposure of Graphite India will enable it to operate Powmex, Bangur said.
GKW will continue with its other businesses such as screw, fasteners and metal press. Formerly Guest Keen Williams Ltd, GKW has significant land reserves which it may develop when the market revives. GKW came out of the Board for Industrial and Financial Reconstruction a year ago. The market gave a thumbs-up to the deal. GKW share rose 10 per cent to close at Rs 28.60 on Friday.