Financial stress may delay Liberty Steel's project expansion plans in India

Media reports said near-collapse of Gupta Family Group Alliance's biggest lender has completely choked off the key source of funding

The expansion of two Liberty Steel group’s projects in India including Adhunik Metaliks may face delays as the Sanjeev Gupta-owned conglomerate is facing financial stress back home, say bankers. Liberty Steel Group had acquired Adhunik Metaliks in March last year for Rs 500 crore, and was planning to double the capacity of its Odisha based unit to one million tonnes. The group had also acquired Zion Steels Limited which is producing TMT bars for Adhunik Metaliks.

AML was the first big ticket investment under the Indian insolvency process by Sanjeev Gupta-led Gupta Family Group (GFG) Alliance, which owns Liberty Steel Group. The company had earlier tried its luck to acquire other companies like Amtek Auto but failed to close the deals due to pending litigation in these companies.

Media reports said the near-collapse of GFG Alliance (GFA)’s biggest lender, Greensill Capital, has completely choked off the key source of funding and is threatening the expansion of the group's projects.

Till date, Liberty’s strategy in India was driven by four key trends – increasing demand for steel and aluminium, the urgent need to decarbonise these sectors, the decline of traditional manufacturing industries in developed economies and the need to be globally competitive in a changing world.

Group officials said with the steel prices going up, the group is in a better financial wicket than last year. Officials also said its India projects are on schedule and they are not expecting any issues going forward in India. The group will slow down on its other acquisitions in India to focus back home, said a lender.

A spokesperson for GFG Alliance said its global businesses are running as normal and that the company is making progress in lining up new funding, Bloomberg reported on Sunday. However, various potential suitors are already sending feelers to the group’s lenders to acquire GFG’s assets across the world.

Gupta has a debt pile of roughly £4 billion ($5.53 billion), of which more than £3 billion ($4.15 billion) is owed to Greensill, the Sunday Times reported during the weekend. With Greensill now on the brink of bankruptcy, the GFG will have to sell assets to repay debt, the media reported.