Japanese Steel maker Sumitomo Metal Industries is to acquire a stake interest in another Indian firm, after acquiring an interest in Bhushan Steels’ SPV of 6 MT steel plant project in West Bengal. Sumitomo said it is set to acquire a 5.88 per cent shareholding in Steel Strips Wheels Ltd for an investment of $10 million, around Rs 44.2 crore. Sumitomo Metal Industries is part of the larger Japanese conglomerate, the Sumitomo Group.
The investment transaction will be concluding by the end of this month and the Steel Strips Wheels board has already agreed to issue and allot 8.5 lakh equity shares to Sumitomo Metal at Rs.520 a share on a preferential allotment basis. The proceeds from the allotment would be used to part finance its expansion at Chennai and for developing R&D and tool room facilities.
Steel Strips Wheels Ltd manufactures automotive steel wheels, with a product range that is inclusive of wheels for passenger cars, multi utility vehicles, tractors, trucks, OTR vehicles as well as two and three wheelers. The Indian firm currently has two existing production facilities based in Dappar (near Chandigarh) and Oragadam (near Chennai) with a total capacity of 10 million wheels per annum. It is also setting up a third facility at Jamshedpur, which is designed to produce only truck wheels which will have an initial capacity of 1 million wheels per annum.
Sumitomo is the owner and controller of Ring Tech, considered Japans’ top steel wheel maker, which in turn has been in technical alliance with Steel Strips. The alliance would help the Indian firm get a place in the worldwide OEM alliance across Japan, China, India and Europe.
As earlier stated, the Japanese firm is as well acquiring another 40 per cent stake in Bhushan Steels’ SPV of 6 MT steel plant project in West Bengal. In addition to that, Sumitomo Metal Industries is expected to join another such partnership by a Japanese and Indian steel firm. Sajjan Jindal-led JSW Steel recently struck a partnership with JFE, Japan.
Steel Strips Wheels Limited is an India-based company. The Company is engaged in the manufacture and sale of automotive wheel rims. During the fiscal year ended March 31, 2009 (fiscal 2009), the Company commenced commercial production at its unit at Oragadam. This unit manufactures wheel rims for passenger cars segment.
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