Rama Steel Tubes has approved a major Rs 346.40 crore preferential share issuance and expanded its authorized capital to Rs 250 crore. The funds and equity swaps are earmarked for the 100% acquisition of Automech Group Holding Limited, with the acquisition deadline now extended to December 15, 2026. Shareholders will vote on these proposals at an upcoming EGM.
Rama Steel Tubes Announces Rs 346 Crore Fundraise and Strategic Acquisition
Rs 346.40 crore total preferential issuance; authorized capital increased to Rs 250 crore.
Reader Takeaway: Growth through strategic overseas acquisition supported by promoter and investor capital infusion via preferential equity issues.
What just happened
Rama Steel Tubes Ltd has cleared a comprehensive financial and strategic plan during its board meeting held on September 22, 2026. The board authorized an increase in the company's authorized share capital from Rs 200 crore to Rs 250 crore. Simultaneously, the company confirmed an extension for its 100% acquisition of Automech Group Holding Limited (ADGM), with the new completion deadline set for December 15, 2026.
Why this matters
The acquisition of Automech Group is a significant expansion move for the company. To fund this, the board approved a total preferential issuance of securities worth Rs 346.40 crore. This includes issuing equity shares for cash, shares for non-cash consideration (share swap for the acquisition), and convertible warrants for the promoter, Mr. Naresh Kumar Bansal. This structure allows the company to integrate Automech while bolstering its capital base.
The Acquisition Breakdown
The total consideration for the Automech deal is AED 296 million. The structure involves:
- RST International Trading FZE: Acquiring 78.38% for AED 232 million.
- Rama Steel Tubes Limited: Directly acquiring 21.62% for AED 64 million (approx. Rs 166.40 crore).
Preferential Issuance Details
- Equity for Cash: Up to 28 crore shares at Rs 5 per share (Rs 140 crore) for promoters and specific investors.
- Share Swap: Up to 33.28 crore shares at Rs 5 per share (Rs 166.40 crore) issued to Mr. Jagjit Gouri as consideration for the Automech stake.
- Convertible Warrants: 8 crore warrants at Rs 5 each (Rs 40 crore) issued to the promoter, convertible within 18 months.
What to track next
Investors should look for the upcoming Extraordinary General Meeting (EGM) notice, where shareholders will formally vote on these capital structure adjustments. Progress toward the December 15 deadline for the Automech deal remains the key operational milestone to watch.