In a significant move to broaden its business portfolio, Rama Steel Tubes Limited, a well-established player in the steel tubing sector, has received board approval for acquiring a 24.81% stake in Bigwin Buildsys Coated Private Limited. The decision, which will see Rama Steel Tubes invest Rs. 7.51 Crore, is set to be executed through the subscription of new equity shares of Bigwin Buildsys. This marks a strategic step in expanding Rama Steel Tubes’ reach in the construction and coated materials sector, diversifying its interests beyond traditional steel products.
The transaction will be structured via a preferential issue of shares, where the fresh equity shares of Rama Steel Tubes Limited will be issued to facilitate the purchase. This method allows for a streamlined investment process, ensuring compliance with the Securities and Exchange Board of India regulations under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018. The deal is contingent on the approval of both the company’s shareholders and the relevant regulatory authorities, including the necessary clearance from SEBI.
The move to acquire a stake in Bigwin Buildsys Coated Private Limited is strategically aligned with Rama Steel Tubes’ broader growth plans. Bigwin Buildsys specializes in providing coated materials for construction, a market that is witnessing increasing demand due to urbanization and infrastructure development. By tapping into this niche, Rama Steel Tubes aims to expand its product offerings and capitalize on the growing demand for coated steel products, which are crucial for industries such as construction, automotive, and manufacturing.
The acquisition of the 24.81% stake in Bigwin Buildsys is expected to enhance Rama Steel Tubes’ competitiveness in the coated materials market, complementing its existing portfolio of steel tubes and other steel-based products. As a company that has been a key player in the steel tube industry, this strategic move underscores its commitment to diversification and expanding into high-demand markets.
The total consideration for the acquisition is Rs. 7.51 Crore, which will be paid by issuing fresh equity shares of Rama Steel Tubes Limited. The shares will be issued at a price of Rs. 14 per share, in line with the pricing mechanism set by SEBI (ICDR) Regulations, 2018. These provisions ensure that the transaction is carried out in a transparent and regulatory-compliant manner, protecting the interests of both the company and its shareholders.
The shares to be issued by Rama Steel Tubes are part of a preferential issue, which is a common method used by companies to raise funds and facilitate strategic acquisitions. This form of issuance allows the company to offer shares to a specific group of investors, typically at a pre-determined price, rather than going through a public offering process. However, the issuance and the acquisition will be subject to shareholder approval, which will be sought through an Extra-Ordinary General Meeting. This step ensures that the shareholders have a say in significant corporate decisions and that the transaction is in line with their expectations and interests.
Given the nature of the transaction, it is also subject to approval by regulatory authorities, including SEBI. The preferential issue of shares must comply with all relevant provisions of SEBI's (ICDR) Regulations, 2018, which govern such transactions to ensure fairness, transparency, and accountability. SEBI’s approval process involves reviewing the proposed terms of the transaction, including the pricing, the number of shares to be issued, and the overall impact of the acquisition on the company’s financial health.
For Rama Steel Tubes, this investment in Bigwin Buildsys Coated Private Limited is not only a financial move but also a long-term strategic decision. The steel industry, particularly the segment focusing on coated and specialized materials, is expected to grow significantly due to increasing infrastructure and industrial projects across India. By acquiring a stake in a company that specializes in these materials, Rama Steel Tubes is positioning itself to capitalize on these trends.
Furthermore, Bigwin Buildsys has a strong presence in the coated materials sector, and this partnership will likely enhance Rama Steel Tubes’ ability to access new markets and broaden its customer base. Coated materials are used extensively in industries such as construction, automotive, and manufacturing, where durability and corrosion resistance are critical. This investment will enable Rama Steel Tubes to integrate these high-value products into its offerings, thus enhancing its market appeal.
