Vikas Ecotech Ltd to acquire Shamli Steel Pvt Ltd

Vikas Ecotech Limited has signed the agreement to acquire 100% Equity of M/s Shamli Steel Private Limited, a company engaged in manufacturing Infrastructural Steel (Bars & Raw Material) at a negotiated enterprise value of INR 1600 Million from its existing shareholders in a Share Swap deal. Apart from the aforementioned, the Company has also provided Shamli Steels a working capital assistance of INR 150 Million while Signing the Agreement and will further induce more cash for the working capital requirements in the tune of about INR 350-500 Million during the first 3-6 Months after taking over the operations of the plant.

Vikas Ecotech in the quest to expand its business interests ventured into the Infrastructure Development related products during FY 2021-22 with supplying Infrastructural steel to renowned Civil & Public construction companies in the Northern Indian Region. While the infrastructure business division contributed INR 1166 Million Approx. to the company's topline during FY 2022-23, while demonstrating a healthy growth of about 11 % as compared to the preceding year. Having gathered immense experience and confidence to expand its foothold in the business based on the foundation of the consistent and growing business build in the infra segment during the recent two years, Vikas Ecotech has been eying the opportunities to venture into manufacturing of infrastructural steel.

The new acquisition is capable of contributing an additional INR 9000 Million to the Gross Revenue of the company which is a huge leap from the current levels while on the other hand has the potential to generate INR 150-200 Million of Gross Profits er Annum.

Nevertheless, Vikas Ecotech has evaluated, decided and approved the enhancement of the Power Supply Connection via a fresh CAPEX of about INR 90 Million Approx, while adding a private Electric Sub Station for Shamli Steel Unit, which in turn will improve the Gross Margins for Shamli Steels by a significant 50-60% as compared to the profits generated by Shamli during recent years. This will definitely provide an edge to the company while expanding its footprint in the regional market but also opens the possibilities to target the market potential in the adjoining geographical regions which shall contribute positively to trigger the process for a faster growth, leading to better economies resulting in even better commercial results.

Shares of Vikas EcoTech Limited was last trading in BSE at Rs. 4.06 as compared to the previous close of Rs. 4.09. The total number of shares traded during the day was 6834370 in over 4833 trades.

The stock hit an intraday high of Rs. 4.13 and intraday low of 4.00. The net turnover during the day was Rs. 27702172.00.

Source : Equity Bulls

Keywords

VikasEcoTech INE806A01020 Acquisition Agreement ShamliSteel