Transformers & Rectifiers India Limited has made a significant move in the power sector by announcing its decision to acquire a controlling stake in Posco Poggenamp Electrical Steel. This strategic investment, formalized through a term sheet signed on November 12, 2024, marks a pivotal moment in TARIL's growth strategy and its commitment to strengthening its position in the energy and infrastructure sectors.
Posco Poggenamp Electrical Steel, the acquisition target, is a key player in the manufacturing and processing of Cold-Rolled Grain-Oriented Lamination and Built-up Cores. These components are crucial for power and distribution transformers and reactors, making this acquisition strategically important for TARIL's core business. The company boasts an impressive installed capacity of 24,000 metric tons per annum and is capable of processing materials for transformers and reactors up to 1200 kV class and 1000 MVA rating, positioning it as one of India's largest and most advanced facilities in this sector.
The acquisition is expected to bring multiple benefits to TARIL. Firstly, it will optimize the company's supply chain management, particularly important given that CRGO electrical steel constitutes about 33% to 35% of the raw material cost in transformer and reactor production. By bringing this critical component of production in-house, TARIL aims to gain tighter control over quality and consistency, which are paramount in the performance of transformers and reactors.
Furthermore, this move aligns with TARIL's long-term vision of becoming a 100% backward integrated company. The integration of Posco Poggenamp's capabilities will allow TARIL to have direct control over a significant portion of its supply chain, potentially leading to improved operational efficiencies and cost management. This is particularly crucial in an industry where the reliability and performance of end products are heavily dependent on the quality of raw materials and manufacturing processes.
The acquisition is also expected to enhance TARIL's market presence, especially in the growing energy and infrastructure sectors. As India continues to invest heavily in its power infrastructure, the demand for high-quality transformers and reactors is likely to increase. By securing a reliable source of CRGO laminations and built-up cores, TARIL positions itself to meet this growing demand more effectively and potentially expand its market share.
