Sudesh Group is engaged in steel pipes and tubes manufacturer through different group entities including listed entities. In February 2021, the Board of Directors of APL Apollo Tubes Limited, one of the entities belonging to Sudesh Group approved a scheme of amalgamation of its step-down listed subsidiary Apollo TriCoat Tubes Limited and unlisted subsidiary, Shri Lakshmi Metal Udyog Limited with itself. The announcement was made to usher the consolidation of pipe manufacturing business carried through different companies into a holding company.
It is not unfamiliar for many corporates to start similar businesses in different companies/subsidiary companies to achieve different commercial objectives. However, what makes it unique in APL Apollo the chronology; From the early strategy to start the business under different entities followed by making holding-subsidiary companies and finally consolidation under one roof and intriguingly, all this happened in two three years!
In this article, we have tried to analyze all steps taken by the group in last few years.
Overview of companies involved in the Transaction
APL Apollo Tubes Limited (APL Apollo) is engaged in the business of production of ERW steel tubes. The Company is an umbrella company for Sudesh Group. The equity shares of APL Apollo are listed on BSE & NSE. The Company is promoted and controlled by Mr. Sanjay Gupta & other family members including Rahul Gupta.
Shri Lakshmi Metal Udyog Limited (SLMUL) is engaged in the business of production of ERW steel tubes and GP Coils. It is a Wholly-owned subsidiary of APL Apollo.
Apollo Tricoat Tubes Limited (Apollo TriCoat) is engaged in the business of production of steel designer roofing, fencing, steel door frames, designer hand railings etc. It has two manufacturing unit one at Malur Bengaluru, and the second at Ghaziabad Uttar Pradesh. The company is subsidiary of Shri Lakshmi Metal Udyog Limited holding 55.82% in Apollo TriCoat. The shares of Apollo TriCoat are listed on BSE. Apollo TriCoat became a part of AP Apollo in 2018.
Product Structure among companies
APL Apollo is engaged in the production of ERW & Steel tube pipes while Apollo TriCoat is engaged mainly in value-added products. In the last couple of years, Apollo TriCoat launched several value-added products which are unique and off course, margin accretive to the group.
APL Apollo has 8 manufacturing units with a combined manufacturing capacity of 2.25 mm tons while Apollo TriCoat has 2 manufacturing units with a capacity of 0.35 mm tons. SLMUL is also engaged in the business of ERW steel tubes and GP coils.
The merged entity will have larger portfolio of products, diversified clients and access to each other distribution channel and technology. Apollo TriCoat can effectively use the distribution channel of APL Apollo having total 800 distributors in addition to its own 100 distributors. APL Apollo will have access to high-end galvanizing technology, which will enable to add new products – Inline Galvanizing (ILG) Pipes, Door Frames, Hybrid Pipes and Narrow Section directly under its roof.
The Proposed Transaction
From Appointed Date 1st April 2021, SLMUL & Apollo TriCoat will merge with its APL Apollo.
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