Vikas Ecotech Ltd (VEL) has announced the acquisition of Shamli Steel for Rs 160 crore. Vikas Ecotech Ltd has committed an initial working capital injection of Rs 15 crore into Shamli Steel. Additionally, the company is gearing up to make investments in the range of Rs 35-50 crore over the initial 3-6 months following the operational takeover of the plant.
Vikas Ecotech, founded in 1994, is a specialty chemicals and polymer additives manufacturer. It excels in creating sustainable solutions for diverse industries, including automotive, agriculture, and construction.
On the other hand, Shamli Steel, part of the Vikas Group, is a key player in the steel manufacturing sector. Established in 2004, it specializes in producing high-quality steel products for infrastructure and construction projects.
Vikas Ecotech has secured complete ownership of Shamli Steel through a share swap arrangement, with the transaction being valued at Rs 1,600 million (Rs 160 crore). This acquisition is poised to enhance the company’s gross revenue, anticipating an additional infusion of Rs 900 crore.
The incorporation of Shamli Steel into Vikas Ecotech’s portfolio is expected to confer a distinct competitive advantage, particularly in terms of expanding the company’s presence in regional markets. The deal not only underscores Vikas Ecotech’s commitment to growth but also positions the company strategically for increased market influence and profitability.
Vikas Ecotech delved into the realm of Infrastructure Development products in the fiscal year 2021-22. The company supplied infrastructural steel to many Civil and Public construction firms in the Northern Indian region. The infrastructure business division contributed approximately INR 1166 million to the company’s revenue in FY 2022-23, marking a robust growth of around 11% compared to the previous year.
Empowered by substantial experience and confidence gained from establishing a consistent and expanding presence in the infrastructure segment over the past two years, Vikas Ecotech is actively exploring opportunities to venture into the manufacturing of infrastructural steel.
The acquired entity holds the potential to boost the company’s Gross Revenue by an impressive INR 9000 Million, representing an increase from current levels. Concurrently, it is anticipated to yield Gross Profits in the range of INR 150-200 Million annually.
In alignment with this move, Vikas Ecotech has undertaken a thorough evaluation and granted approval for an investment of approximately INR 90 million towards enhancing the Power Supply Connection. This includes the establishment of an Electric Sub Station for the Shamli Steel Unit. This initiative is poised to elevate Shamli Steel’s Gross Margins by a notable 50-60%, surpassing the profits generated in recent years.
