ArcelorMittal, JSW Steel among six firms keen on buying Uttam Galva Steel

Uttam Galva's total admitted claims are Rs 9,070.66 crore, with ArcelorMittal having an 87 per cent voting share among financial creditors

Four steel companies — ArcelorMittal, JSW Steel, Jindal Steel & Power (JSPL), and Vedanta-owned ESL Steel — have submitted expressions of interest (EoIs) for debt-laden Uttam Galva Steels.

Sources close to the development have confirmed that six companies, including the four cited above, have submitted EoIs for the firm.

Uttam Galva’s admitted claims are Rs 9,070.66 crore, with ArcelorMittal having an 87 per cent voting share among the financial creditors.

The last date for submitting the EoI was December 15, but was extended by seven days. The companies would be invited to submit resolution plans, indicated sources.

The interest in Uttam Galva comes at a time when the steel sector is on an uptrend, with prices and spreads at a multi-year high. If the companies finally submit resolution plans, then after Bhushan Steel, Bhushan Power & Steel, and Essar Steel, it would be a keenly contested asset.

JSPL Managing Director V R Sharma said: “Uttam Galva is a downstream unit. We can buy hot-rolled coil from JSW Steel and then convert it into cold-rolled and galvanised products for exports. Our main aim is export.”

Uttam Galva’s manufacturing facilities are located in Khopoli, Maharashtra, and in close proximity to Nhava Sheva and Mumbai ports, which puts it at an advantage for export.

One of the companies in the fray said the unavailability of downstream capabilities was generating an interest among steel companies in Uttam Galva.

Uttam Galva happens to be one of the largest manufacturers of cold-rolled and galvanised products in Western India. It procures hot-rolled steel and processes it into cold-rolled steel and further into galvanised steel and colour-coated coils.

According to sources, it has a cold-rolling capacity of 1.2 million tonnes, which can be expanded.

JSW Steel and ArcelorMittal declined to comment on the submission of an EoI.

Pankaj Malhan, chief executive officer, ESL Steel, said, “As of now, no comment.”

For ArcelorMittal, it would be an opportunity for recouping its payment of Uttam Galva’s dues. According to the list of financial creditors, as of November 23, ArcelorMittal India’s admitted claims were Rs 6,476 crore (71.40 per cent voting share) and AMNS Luxembourg Holding S.A.’s Rs 1,445 crore (15.94 per cent voting share).

ArcelorMittal became a significant financial creditor of Uttam Galva by taking on the bulk of Uttam Galva’s debt in 2018 to become eligible for the Essar Steel bid under the insolvency law. Insolvency and Bankruptcy Code (IBC) rules prevented promoters of defaulting companies from bidding for assets. Before submitting its bid for Essar Steel, ArcelorMittal was a co-promoter of Uttam Galva.

Uttam Galva was on the Reserve Bank of India’s second list of non-performing assets to be resolved under the IBC. A sharp increase in raw material prices and cheap imports from China landed the company in losses and it started delaying payment to lenders. 

However, with ArcelorMittal taking on the debt, State Bank of India (SBI), which had moved the petition, withdrew it.

But Uttam Galva defaulted on balance debt subsequently and on October 1, 2020, the National Company Law Tribunal, Mumbai Bench, admitted a petition filed by SBI under the IBC.

The corporate insolvency resolution process for Uttam Galva is expected to be completed by March 31.