The Miglanis of Uttam Galva Steel Ltd, which is co-promoted by ArcelorMittal, are in income-tax trouble for their unlisted company -- Uttam Galva Metallics.
The Mumbai Income Tax (I-T) department has conducted a survey on Uttam Galva Metallics Ltd. Sources in I-T department said they had unearthed unaccounted income and assets of around Rs 600 crore in a survey conducted on business premises of the company on Wednesday and Thursday.
Uttam Galva Metallics is owned by the Miglani family and is outside the purview of Uttam Galva Steel -- the listed company -- where ArcelorMittal is a partner.
Uttam Galva Metallics has a half a million tonne pig-iron plant in Wardha, Maharashtra.
Ankit Miglani, a promoter of Uttam Galva Metallics and the deputy managing director of Uttam Galva Steel said, "There was no survey on Uttam Galva Steel Ltd. I'm not bound to comment on Uttam Galva Metallics as it is an unlisted company."
Director General (Investigations), Income-Tax Department, Mumbai, Swatantra Kumar refused to comment.
In 2009-10, ArcelorMittal, through its subsidiary Arcelormittal Netherlands BV bought 33.8% stake in Uttam Galva Steel for Rs 500 crore to become the co-promoter of the company with the Miglanis keeping the rest 37.03% stake.
The Miglanis of have been looking to invest in steel companies in India through their unlisted companies while Uttam Galva continues to make flat steel for the auto and consumer durables sector in India.
As recently as November, the Miglanis, through Uttam Galva Metallics bought a 58.35% stake in Lloyds Steel. The deal was done in phases with the first stake of 24.53% bought in March this year for Rs 180 crore. Later, the company was allotted 38 crore preferential shares and then acquired 6.37% stake through the open offer route for Rs 77.44 crore. The company has said that it will invest Rs 380 crore in Lloyds Steel to revive the loss-making company. Lloyds Steel is a listed on Indian exchanges.
ArcelorMittal from its joint venture with Uttam Galva imports its steel in India and sells in the local market given its two mega 12 million tonne each projects in Jharkhand and Odisha are yet to even begin construction.