UD Group picking around 10% in Uttam Value Steels for $32M

Mumbai-based iron and steel manufacturer Uttam Value Steels is raising Rs 200 crore ($32.16 million) through a preferential allotment of shares to a Singapore-based strategic investor, as per a stock market disclosure.

The company’s board has approved issue of up to 129 million equity shares to UD Industrial Holding Pte Ltd at an issue price of Rs 15.50 each. The allotment is to be made at over two times the current market price.

UD Industrial Holding is the holding arm of industrial vertical of UD Group whose flagship group firm is Ushdev International, one of the top 50 metal trading companies in the world in terms of annual sales.

Through UD Industrial Holding it has stake in various metal manufacturing companies in India. This gels with the group’s trading business. As per its website, it has exposure to India Steel Works (which is into stainless steel products); Uttam Galva Metallics (supplies hot metal); Indrajit Power (supplies power to Lloyds Steel); Shree Uttam Steels & Power (manufacturer of cold rolled steel and galvanized steel) and Uttam Galva Ferrous Ltd.

As on December 31, 2013, promoters of Uttam Value Steels owned 51.02 per cent in the company, data available with the stock exchanges showed. Their holding will shrink to 46 per cent post the preferential allotment.

The company is into various types of steel manufacturing besides trading. For the quarter ended December 2013, the sales turnover of the company was reported at Rs 1,531.44 crore with a net loss of Rs 27.89 crore. It has three units, trading, steel products and engineering offerings.

The company is amid a deal where its engineering unit is to be demerged to Lloyds Steels. In a separate disclosure on Friday, Uttam Value Steels said that a scheme of arrangement with Lloyds Steels Industries (LSIL), wherein the engineering division of the company would be demerged to LSIL, has been postponed. The board of the company had approved the proposal earlier last week.

(Edited by Joby Puthuparampil Johnson)

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