Corporate Development     

Published: March 15, 2024
Updated: March 15, 2024

Kalyani Steels

Betting big on speciality steel

Established in 1973, Kalyani Steels (KSL), a part of the over $ 3 billion Kalyani group headed by Baba Kalyani, is in aggressive growth mode. This fivedecade- old entity, a preferred supplier of forging-quality steel for a variety of automotive applications, including commercial vehicles, passenger cars and construction equipment, is clearly poised for a big leap.

Though the company has not announced whether it will be going it alone or with a joint venture partner, what is certain is that of late KSL has become an aggressive player and is determined to scale up and be self-reliant in meeting the group’s captive requirements for defence grade steel in a big way.

In another major development, KSL has been declared a successful bidder for the acquisition of the assets of a company under liquidation — Kamineni Steel & Power India Pvt Ltd (KSPIL) — through the e-auction platform under the Insolvency and Bankruptcy Code, 2016, for Rs 448.36 crore. The cost includes the entire land and building, plant & machinery, with a manufacturing capacity of 3,50,000 mtpa highquality steel billets in both round and square cross-sections. KSL is already in the possession of this asset.

PRIME LOCATION

KSPIL’s plant is strategically located at Narketpally, Nalgonda district, Telangana with access to Chennai, Krishnapatnam and Mumbai ports by road and rail. The plant has a total land area of 143.8 acres, with an additional 52.2 acres of non-agricultural land. Needless to mention, KSL will not only revive and uplift this unit but also scale it up with a wide range products.

In 1997, KSL shifted its manufacturing base to Hospet, Karnataka and set up an integrated greenfield steel mill using the iron-ore based blast furnace route, with a hot metal capacity of 2,90,000 mtpa which has now been increased to 6,50,000 mtpa. The original Pune manufacturing facility with the arc furnace route was transferred to a joint venture with Carpenter Corporation of the US, which is now known as Kalyani Carpenter Special Steels Ltd. The management has not yet clarified whether Carpenter Corporation will become a partner in their proposed Rs 11,750-crore Odisha venture or not.

GREAT RATINGS

As of the half-year ending September 30, 2023, KSL had a long-term borrowing of Rs 125 crore and Rs 135 crore towards a working capital loan. Its long-term bank facilities enjoy a credit rating of ‘AA’ whereas the shortterm bank facilities and commercial paper are rated at ‘A1+’. KSL has equity capital of Rs 21.86 crore wherein the promoter group holds 64.70%, while BF Investments (a listed company) is the single largest entity having a 39.06% ownership. The public holding of 35.30% is spread amongst 42,125 shareholders. It is important to point out that during the last one month, the KSL stock, which normally trades steadily, has witnessed higher volumes with the price going up every trading day. The current price of Rs 896 (Rs 5 face value) is not only a yearly high but is in sharp contrast to its yearly low of Rs 281 quoted in March 2023.