Nithia Capital, CarVal Investors complete purchase of two Uttam Group firms

Total consideration Rs 2,000 cr; companies were on RBI's second list of NPAs mandated for resolution under IBC

Nithia Capital and CarVal Investors announced on Tuesday that they have completed the acquisition of Uttam Galva Metallics (UGML) and Uttam Value Steel (UVSL) for a total consideration of Rs 2,000 crore.

The firms were on the Reserve Bank of India’s (RBI’s) second list of non-performing assets mandated for resolution under the Insolvency and Bankruptcy Code (IBC). The combined admitted claims by financial creditors of the inter-linked entities — once owned by the Miglani family — amounted to Rs 7,190 crore.

The acquisition was made through a Singapore-based joint venture holding company of Nithia and CarVal — Wardha Steel Holdings.

The deal was closed on December 29, more than a year after the firms were admitted to the National Company Law Tribunal (NCLT) for resolution.

The resolution plan for the two entities was approved by the tribunal in April. However, litigations by operational creditors held up the deal. In September, the National Company Law Appellate Tribunal (NCLAT) set aside objections by operational creditors, clearing the path for closure of the deal.

Johannes Sittard, chairman and founding member of Nithia Capital, has been appointed chairman of Wardha Steel, while Founder and CEO Jai Saraf has been appointed chairman of Uttam.

Commenting on the acquisition, Saraf said: “Nithia envisions the creation of a consolidated steel operating platform of up to 2 million tonnes of production per year in India, through acquisition and organic growth.”

He added: “We have been looking at multiple steel acquisition opportunities in India over the last few years, and are confident we will continue to grow and build on the success of Uttam. We consider India the engine of growth for global steel for the next 20-25 years, and it is our intention to actively participate in this process,” he added.  

Nimrod Wei, managing director of CarVal Investors, said: “Our aim has always been to identify unique value investment opportunities across the globe, in which we can leverage our proprietary research and investment experience across cycles and geographies to create value for all stakeholders.”

Uttam (UVSL and UGML) is an integrated mid-sized flat steel producer with an annual capacity to produce 0.7 million tonnes of crude steel. The facilities are located near Nagpur with captive railway siding, thus enabling its reach to all major markets across the country, and proximity to iron ore.

The plan of Nithia Capital and CarVal is to increase Uttam’s primary steelmaking capacity by 50 per cent in the immediate future by completing partially completed projects in a timely and cost-effective manner, the company said.

While the resolution of UVSL and UGML is now complete, the process for another Miglani family company — Uttam Galva Steels (UGSL) — is underway.

At least six firms — including ArcelorMittal,JSW Steel, Jindal Steel & Power, and Vedanta-owned ESL Steel — have submitted their expression of interest for the company.