Delhi-based Prakash Industries is planning to buy Nova Iron & Steel.

Nova Iron and Steel has a 1.5 lakh tonne sponge iron unit in Bilaspur district, Chhattisgarh. The company does not own any iron ore mines and buys the raw material from the market, mainly from Orissa.

The location of the Nova plant is ideal for Prakash as Prakash has two sponge-iron units each in Champa (Chhattisgarh) and Raipur (Chhattisgarh),while, the unit of Nova Iron is located in Bilaspur which is in the middle of Champa and Raipur.

Transaction Reference: DNA

Prakash industries Ltd is a part of “Surya Roshni” group. It is engaged in integrated steel and power operations involving production of sponge iron, mild steel billets, heave and medium structural, wire rod, and ferro alloys with generation of power.

It has planned to spend Rs3300 Cr over five years to nearly double its sponge iron capacity to 1.2 mt to capitalize on iron ore integration and to raise its power generating capacity by 625 MW power plant. It currently has a 100 mw plant.

Nova Iron & Steel Ltd owns and operates iron and steel plants and also provides product separation, screening, and storage facilities.

For the year ended March 31, 2010, Nova reported total revenues of Rs.144.77 Cr and a net loss of Rs.4.23 Cr.

For Q1 2011, its net sales stood at Rs.1.73 Cr as against Rs.40.46 Cr for the same period last year. It suffered a net loss of Rs.4.05 Cr in Q1 2011 as against a profit of Rs.8.80 lakh for the same period last year.

As on June 30, 2010 the promoters of Nova Iron and Steel had 58.22% stake in the company.

Steel Industry is seeing a lot of M&A deals this year. Recently, Shyam Steel has announced to acquire a majority stake in Orissa-based Beekay Steel. Concurrent (India) Infra is also acquiring Pune-based Vakratund Ispat andKIOCL is acquiring Hospet based sick PSU Tungabhadra Steel Products Ltd.

Few months back, Essar Steel has acquired UK largest steel processor Oakside Solutions Ltd, while Jindal Steel & Power acquired Oman based Shadeed Iron & Steel for $500 Mn.

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