UK-based stressed asset management companies, Nithia Capital and CarVal Investors, announced Tuesday that they have completed the acquisition of Uttam Galva Metallics Limited (UGML) & Uttam Value Steel Limited (UVSL) for a total purchase consideration of around Rs 2000 crore.
“The acquisition of Uttam is an important and strategic step for Nithia Capital. Nithia envisions to create a consolidated steel operating platform of up to 2million tons of steel production per year in India through acquisition and organic growth,” said Jai Saraf, founder of Nithia Capital.
Saraf added that he considers India to be the engine of growth for world steel for the next 20-25 years, and it is the company’s intention to actively participate in this process.
The asset management company has acquired Uttam through their Singapore-based Joint Venture Holding Company, Wardha Steel Holdings Pte Ltd.
Johannes Sittard, chairman and founding member of Nithia Capital, has been appointed Chairman of Wardha Steel and Jai saraf, founder and chief executive officer of Nithia Capital, has been appointed the chairman of newly acquired Uttam Galva Metallics and Uttam Value Steels.
“Our aim always is to identify unique value investment opportunities across the globe where we can leverage our proprietary research and our investment experience across cycles and geographies to create value for all the stakeholders,” said Nimrod Wei, managing director, CarVal Investors
Uttam Value Steels is an integrated steelmaking company that produces hot rolled coils, cold rolled coils, galvanised coils and sheets and colour-coated products, among other products, with a total capacity of 1 million tonnes.
Uttam Galva Metallics is an unlisted entity that manufactures hot metal/pig iron and has an iron making capacity of 0.60 MTPA at Wardha, Maharashtra. It is a major supplier of hot metal to Uttam Value Steels Ltd.
The facilities are located in the centre of India near Nagpur with captive railway siding, enabling reach to all major markets countrywide and proximity to Iron ore, the company said in a statement.
“The plan of Nithia Capital and CarVal is to increase Uttam’s primary steel making capacity by 50% in the immediate future by completing partially completed projects in a timely and cost effective manner,” the company said in a joint statement.
In May 2019, a lenders’ consortium led by SBI had initiated insolvency proceedings against two distressed entities of Uttam Galva Steels, which were recommended for corrective action by the Reserve Bank of India in its second list of large defaulters. The National Company Law Tribunal (NCLT) then approved the CarVal Investors and Nithia Capital Resources Advisors LLP-led consortium’s resolution plan for acquisition of the assets.
On May 6th of 2020, a monitoring agency was formed, in which successful resolution applicants Nithia and CarVal along with two members from the bank and one independent member were made responsible for operating the plants.
As per NCLT’s order, Nithia and CarVal were to pay upfront and a contingent payment of ₹1,078 crore for Uttam Value Steels and another ₹1,576 crore for Uttam Metallics.
Nithia, which specialises in turning around stressed assets in various sectors, had also looked at major assets like Essar, Bhushan and Monnet Ispat, before larger steel players started showing interest.
Source: Economic Times