Aditya Ispat Sells Core Steel Unit for ₹36.76 Crore

Introduction

Aditya Ispat Limited has announced a significant corporate restructuring, with its board of directors approving the sale of its core non-alloy steel manufacturing and trading business. The decision, made on February 23, 2026, involves a slump sale to Jai Bapji Ispat Private Limited, a promoter group entity, for a total consideration of ₹36.76 crore. This strategic divestment is aimed at ensuring the company's survival and preventing further erosion of its net worth.

Board Approves Strategic Divestment

The company's board convened a meeting in Hyderabad where the proposal, recommended by the audit committee, was formally approved. The sale of the business unit as a going concern was greenlit after a thorough review of valuation reports. The transaction is a critical step for the company as it navigates significant financial challenges.

Key Transaction Details

The terms of the slump sale have been clearly defined, with an agreement expected to be finalized by the end of March 2026. The consideration is subject to adjustments based on net working capital.

Rationale Behind the Slump Sale

The audit committee's recommendation underscored the urgency of this transaction. The primary motivation is to safeguard the company's existence and halt the deterioration of its financial position. The committee noted that high debt levels made it difficult to find external buyers for the entire business, leading to the decision to proceed with a related party transaction. This move is positioned as a necessary measure to protect the company from further share capital erosion.

Financial Significance of the Divested Unit

The business unit being sold represents the vast majority of Aditya Ispat's operations. Its contribution to the company's overall performance in the fiscal year 2024-25 highlights the magnitude of this strategic shift. The sale effectively divests the company of its primary revenue-generating activities.

Related Party Transaction and Next Steps

Since the buyer, Jai Bapji Ispat Private Limited, is part of the promoter group, the deal is classified as a related party transaction. The company has stated that the sale will be conducted at arm's length pricing. The process now moves to the shareholders, whose approval is mandatory and will be sought through a postal ballot. The board has authorized Managing Director Aditya Chachan to execute the Business Transfer Agreement once shareholder consent is secured.

Regulatory Framework and Advisors

To ensure compliance and a smooth process, Aditya Ispat has appointed several external advisors. Ernst & Young LLP will serve as the tax and regulatory consultant, while Manjeet Bucha, a practicing Company Secretary, has been appointed as the scrutinizer for the postal ballot process. The e-voting platform will be managed by Central Depository Services (India) Limited. The transaction will be executed via a standalone Business Transfer Agreement, adhering to SEBI's Listing Obligations and Disclosure Requirements (LODR) Regulations.

Company's Financial Health

The decision for the slump sale comes against a backdrop of financial strain. The company's recent financial reports indicate declining sales, with standalone net sales for the December 2025 quarter down 29.8% year-on-year. Furthermore, a high debt-to-equity ratio has placed considerable pressure on its balance sheet, reinforcing the board's rationale for this divestment.

Conclusion

The sale of Aditya Ispat's core steel business is a decisive action to address severe financial distress and restructure its operations for future sustainability. The focus now shifts to securing the necessary shareholder and regulatory approvals. The outcome of the upcoming postal ballot will be a crucial milestone in determining the company's path forward, with the transaction expected to be completed by March 31, 2026.