Essar Steel, part of the Ruia-controlled diversified conglomerate, is set to acquire majority stakes in Shree Precoated Steels Ltd (SPSL), the steel arm of Mumbai based Ajmera Group, under its plans to expand its business in value-added steel market and to become leading player in the cold roll sector.

The deal, worth Rs 700-800 crore, will help country's third largest steel maker Essar Steel - run by brothers Shashi and Ravi Ruia - to control over a manufacturing unit and 200 acres of land of Shree Precoated Steels near Pune.

Shree Precoated Steels MD, Rajnibhai Ajmera has declined to comment over the matter.

Shree Precoated Steels, an unlisted company of the Ajmera group, manufactures color-coated steel and galvanized steel, which is used by various auto companies. It has a capacity to produce about 600,000 tonnes of cold rolled steel, used in cars and consumer goods.

Earlier in 2000, Jindal group had also shown interest in the company, to increase its presence in galvanized steel segment; but the deal could not materialized due to difference over valuations issues.

A spokesperson of Essar Steel said: "We are waiting for Shree Pre-coated to respond to the offer as there are other companies involved in the deal."