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ArcelorMittal likely to bid for Uttam Galva Steels under IBC
Photo Credit: Reuters

Billionaire Lakshmi Mittal-owned ArcelorMittal has shown interest in acquiring Uttam Galva Steels under the Insolvency and Bankruptcy Code (IBC), a person in the know told VCCircle.

The debt-laden firm was admitted recently to the National Company Law Tribunal (NCLT), after a petition filed yet again by the State Bank of India (SBI).

The world’s largest steelmaker ArcelorMittal, a former promoter of Uttam Galva Steels, is likely to bid for the firm, Business Standard first reported. An email sent to Uttam Galva Steels asking for confirmation remained unanswered.

With 250 acres of land and more than 100 000 square metres of covered shed, the Uttam Galva Steel plant is located near Khopoli, which is 100 km away from Mumbai.

As per the firm’s website, the plant has a facility for cold-rolling HR coils, with a capacity of 1,000,000 tonnes per year and annual galvanising capability of 750,000 tonnes.

At present, 50% of the firm’s finished steel production is being exported. The company counts top corporates including auto majors such as Mahindra & Mahindra, Bajaj Auto, Piaggio and Tata Motors in its client list.

The NCLT on October 1 admitted a petition filed by SBI to initiate proceedings under the IBC.

A large part of Uttam Galva Steel’s loans was taken over by ArcelorMittal from public sector banks to bid for Essar Steel in 2018.

ArcelorMittal had made payments worth Rs 4,922 crore (excluding interest) to secured financial lenders, Uttam Galva Steel’s annual report for 2019-20 said.

With ArcelorMittal taking over majority debt, SBI had withdrawn the petition it had first filed in 2018 against Uttam Galva Steels, which was part of Reserve Bank of India’s second list of defaulters in 2017.

However, during the pandemic in April 2020, Uttam Galva Steels defaulted on the balance loan of around Rs 700 crore (including interest) to its lenders. It has an outstanding of Rs 1,008 crore to its creditors including ArcelorMittal.

The annual report also mentioned the account of the company becoming a non-performing asset (NPA) with the lenders.

By the end of April, NCLT had approved the resolution plan submitted by a consortium of CarVal Investors LLP (Carval Funds) and Nithia Capital Resources Advisors LLP to acquire Uttam Galva Steel’s associate firm Uttam Value Steels.

 

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