Visakhapatnam-based Steel Exchange India Limited (SEIL), which is into steel making, trading and software business, is in the process of acquiring the 250,000-tonne sponge iron steel manufacturing mill of Gold Star in Vizianagaram district.
"The Gold Star management has agreed to our proposal to take over its sick unit, which was under the Board for Industrial and Financial Reconstruction. The payment modalities would be finalised soon," Bandi Satish Kumar, managing director, SEIL, told.
The company plans to convert the Gold Star mill into an integrated mini steel unit. "We would invest about Rs 596 crore for conversion and modernisation of the existing unit, after which we would be able to produce 300,000 tonnes of re-bars a year at this unit," he said.
Of the total investment, promoters will contribute Rs 246 crore as equity while Rs 350 crore will be raised from financial institutions, he added.
The takeover will be complete over the next four-five months, and immediately after that SEIL will take up the modernisation works. SEIL operates a 90,000-tonnes capacity steel ingots manufacturing unit at Ravulapalem in East Godavari district, 70,000-tonne capacity steel re-rolling mill and a 40,000-tonne capacity high-carbon steel wire and galvanising steel production mill at Vizag.
The company achieved a turnover of Rs 645 crore with a net profit of Rs 15.03 crore in 2007-08, as against Rs 497 crore and Rs 8.07 crore respectively in the previous year.