Visa Steel surges 20% as firms seeks shareholders' nod for Visa Bao merger

NEW DELHI: Shares of Visa Steel hit their upper circuit limit of 20 per cent on Friday after the company informed the stock exchanges that it would seek shareholder approval to merge joint venture Visa Bao (VBL) in order to rationalise costs and secure raw material for its ferrochrome business.

VBL is a joint venture (JV) between VSL and Baosteel of China, with VSL holding 65 per cent stake and the remaining with Baosteel.

In order to have sustainable growth, it is necessary for any ferrochrome producer to have captive chrome ore mine or a captive power plant, if not both, VSL said in a detailed regulatory filing.

"Hence, with a view to achieving competitive advantage to ensure availability of chrome ore and concentrates and optimise the utilisation of the power plant capacity, it is intended to consolidate the ferrochrome business of VSL and VBL by amalgamating VBL with VSL," it added.

Following the development, the stock soared 20 per cent to hit the roof at Rs 16.38. The BSE Sensex was trading 170 points higher at 26,942.