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More than two years after they first placed their bid, alternative asset manager Nithia Capital and US-based hedge fund CarVal Investors have completed the acquisition of Uttam Galva Metallics and Uttam Value Steels for ₹2,000 crore.
The deal was executed through their Singapore-based joint venture holding company, Wardha Steel Holdings Pte.
Both the Uttam group companies have an integrated mid-size flat steel producer with an annual crude steel capacity to produce about 0.7 million tonnes. The facilities are strategically located near Nagpur with captive railway siding, enabling to reach to all major markets countrywide and proximity to iron ore.
The plan of Nithia Capital and CarVal is to increase Uttam’s primary steel-making capacity by 50 per cent in the immediate future by investing in partially completed projects in a timely and cost-effective manner.
A long wait
Last September, the National Company Law Appellate Tribunal (NCLT) cleared the last hurdle for the execution of the deal by dismissing the appeal of the operational creditor against the bid.
In June 2018, both the companies were admitted for insolvency proceedings after they defaulted on loan extended by Union Bank and SBI.
Resolution professional had admitted claim of ₹4,176 crore of Uttam Galva Metallics and ₹3,014 crore of Uttam Value Steel
The NCLT then approved the CarVal Investors and Nithia Capital consortium for a resolution plan. However, five operation creditors, who had to take 99 per cent haircut, moved NCLT and then the Supreme Court, which turned down their plea.
Johannes Sittard, Chairman, Nithia Capital, was appointed as Chairman of Wardha Steel Holdings while Jai Saraf, CEO, Nithia Capital, has taken over as Chairman of both the companies.
Saraf said Nithia Capital expects to create a consolidated steel operating platform of 2 million tonnes per annum in India through acquisition and organic growth. The company has been looking at multiple steel acquisition opportunities in India over the last few years.
“We consider India to be the engine of growth for world steel for the next 20-25 years,” he added.
Rajib Guha, Partner, Nithia Capital, said the transaction has been a great learning curve for doing business in India and the process has fostered stronger ties with local institutions and businesses.
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