Vohra: Strategic move

Calcutta, June 15: SPS Group has divested a 50 per cent stake in its flagship SPS Steel and Power to Sanjay Surekha’s Concast Group for Rs 200 crore. Both the companies are strong local players in TMT bars used in construction.

Bipin Kumar Vohra, chairman and managing director of SPS Group, said the deal was struck a few months back when he could not get private equity into his company as the economic downturn had affected investment decisions.

“We were ready to sign the term sheet when the global crisis began. As a result, the deal was struck down. Later, we raised equity by selling to Concast Group,” he added.

The company has 0.54 million tonnes of finished steel capacity at Jharsuguda in Orissa and another 0.3 million tonnes in Bengal and Himachal Pradesh.

The development comes at a time when global steel prices crashed from its peak of $1,250 per tonne in early 2008 to $450 per tonne by the end of the year and have increased only marginally since then.

Even then SPS has decided to undertake an investment of Rs 550 crore in Orissa for a host of projects, including a 70-mega-watt power plant, 1- million-tonne coal washery, railway siding and water pipeline from the Hirakud dam to its plant.

Vohra said talks were on with financial institutions to raise about Rs 350 crore in debt. The rest will be brought in by SPS and Concast.

Incidentally, the management of SPS Steel & Power has remained with Vohra. The name has not been changed to reflect the presence of the new investor. The SPS group is known for Elegant, a TMT bar brand. But the brand is owned by another group company and is not part of SPS Steel and Power’s deal with Concast.

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