The Miglani family, joint owner with ArcelorMittal of Uttam Galva Steels, has completed the acquisition of Lloyds Steel by reconstituting its board. The company is now in talks with private equity (PE) companies to inject funds in Lloyds.
Ankit Miglani, from the new promoter group, said, “Currently, we do not need significant capital expenditure in Lloyds but are in talks with a few PE companies for investment at a later stage.”
The erstwhile promoters of Lloyds have resigned and Rajinder Miglani, Ankit Miglani and Rajiv Munjal have taken over management of the company.
Rajinder and Ankit Miglani are chairman and deputy managing director, respectively, of Uttam Galva Steels.
The family now holds 58.35 per cent in Lloyds. Another 21 per cent remains with the latter’s earlier promoters.
The share price of Lloyds closed on Friday at Rs 13.71 a share, up by 19.1 per cent from yesterday’s on the Bombay Stock Exchange.
Lloyds has been a loss-making company for a while. These had totalled to Rs 213 crore for the past two financial years. The total debt is Rs 441 crore.
Ankit Miglani said, “We have spent Rs 647 crore in the stake buy and will now work to bring the company back to profitability.”
The new management is approaching public sector banks for working capital loans.
Miglani said, “Lloyds has been using money from the secondary market at interest rates as high as 24 per cent. They now plan to raise these funds from banks, which will cut interest rates by half.”
The capacity utilisation of Lloyds is 50 per cent and the new board plans to increase it to 750,000 tonnes from the present 500,000 tonnes by the end of the next financial year. “We target to double the pure earnings without significant capital expenditure by streamlining the product mix and bringing down the cost of debt,” said Miglani.
The company plans to raise Rs 1,500 crore through letters of credit and Rs 300 crore in long-term loans.
Lloyds has annual steel making capacity of a million tonnes, with a 200,000-tonne cold-rolled and galvanising steel facility, at its plant in Wardha. The Miglanis’ unlisted company, Uttam Galva Metallics, is next door and supplies 80 per cent of the latter’s raw material needs.
The company has no plans to merge or delist the company as of now but has proposed a name change to Uttam Value Steels Ltd.
