Uttam Galva group has acquired majority stake of about 58.35% in ailing Lloyds Steel and plans to invest additional Rs 380 crore in the steelmaker to turnaround the company.
"It is a matter of paper work now. Most of the formalities (related to acquisition) have been completed and by November 25, we will have majority stake on paper as well," Uttam Galva Steels' Deputy Managing Director Ankit Miglani told PTI.
Lloyds Steel, which has a production capacity of 1 million tonnes per annum (MTPA), has reported net losses of Rs 290 crore in last three financial years. The company has a total loan portfolio (both, secured and unsecured) of about Rs 384 crore.
The acquisition has been done in three phases by the Miglani family controlled group, for which the process had begun in March, when Uttam Galva had acquired 24.53% stake for about Rs 180 crore.
Later, it was alloted 38 crore preferential shares by the Mumbai-based steelmaker and finally, it acquired about 6.37% stake for about Rs 77.44 crore through an open offer, which closed on November 7.
According to Miglani, Uttam Galva group will turnaround the ailing Lloyds Steel within one year by infusing around Rs 380 crore additional money to improve its operations.
"We are infusing about Rs 380 crore into the company (Lloyds Steel). All the money will go into the company to improve its operations and cash requirements. Within one year, we will make Lloyds Steel profitable," he said.
Uttam Galva group will also take over entire debt of Lloyds Steel and management control, Miglani said, adding that there is no plan to delist the Mumbai-based steelmaker in the immediate future.
The Miglani family has acquired the ailing steelmaker through two subsidiaries of Uttam Galva Metallics, Ultimate Logistics Solutions Private Ltd (ULSPL) and Metallurgical Engineering and Equipments Ltd (MEEL).
Uttam Galva Group and Lloyds Steel have been the business partners for long. Uttam Galva's 0.5 MTPA pig iron plant and Lloyds' steel unit are located in Maharashatra's Wardha district and the Miglanis sell most of their pig iron to Lloyds.
The deal is the second major acquisition by Uttam Galva's promoters, the Miglani family, in recent times in a steel firm. Last year, the Miglanis had acquired mining baron G. Janardhana Reddy's Brahmani Industries Karnataka for about Rs 285 crore through Uttam Galva Ferrous.
Besides, world's largest steel producer ArcelorMittal is also a partner of the Miglani's controlled group and holds over 33% stake in Uttam Galva Steels.