Prakash Steelage sells stainless tube biz to Spain's Tubacex

MUMBAI: Prakash Steelage sold 68 per cent stake in its seamless stainless steel tube division for Rs 206 crore to Spain's Tubacex to pay off debt and gain access to the Spanish company's export markets and technology. Prakash Steelage shares shot up 14 per cent before closing atRs 160.20 apiece on Friday on BSE. Mumbai-based Prakash Steelage has a debt of Rs 340 crore as on December 31. Its interest payments for the quarter were more than double its net profit of about Rs 4.4 crore.

Prakash Steelage suffered weak domestic demand and relied greatly on exports in recent years. It has a trading and a welding division apart from the seamless stainless steel tube segment. It expects total sales of Rs 1000 crore this financial year.

Tubacex, world's second largest seamless stainless steel tube maker, said buyout helps it gain access lowcost manufacturing in a growing region. These tubes are used in oil & gas and energy industries. Industry experts said deal is a good way for Tubacex to counter Chinese competitors. Tubacex gets 25 per cent of its revenue from Asian markets. "Tubacex aims to convert India has an exporting hub for Asia. We will bring in new technology," said Tubacex CEO Jesus Esmoris.