Nithia Capital, CarVal Investors complete purchase of two Uttam Group firms for ₹2,000 crore2 min read . Updated: 05 Jan 2021, 02:49 PM IST
- 'The plan of Nithia Capital and CarVal is to increase Uttam’s primary steel making capacity by 50% in the immediate future,' Nithia Capital said
Nithia Capital, a UK-based alternative investment manager that specializes in transforming under-performing acquired facilities into financially healthy business, and CarVal Investors, a global alternative investment manager focused on distressed and credit-intensive assets, announced on Tuesday that they have completed the acquisition of Uttam Galva Metallics Limited (UGML) and Uttam Value Steel Limited (UVSL) for a total consideration of ₹2,000 crore. The purchase is done through Wardha Steel Holdings Pte Ltd, Nithia Capital's Singapore-based joint venture holding company.
In 2019, a consortium of lenders led by SBI had initiated insolvency proceedings against two distressed entities of Uttam Galva Steels, which were recommended for corrective action by the RBI in its second list of large defaulters. The resolution professional (RP) admitted ₹3,634 crore of financial creditor claims in Uttam Galva Metallics while it was at ₹2,479 crore for Uttam Value Steel, as on 9 April, 2020, according to Mint. Union Bank of India has the highest exposure in Uttam Galva Metallics at ₹921 crore, followed by Bank of Baroda at ₹680 crore and Punjab National Bank at ₹571 crore, among others.
In May, 2020, the Mumbai bench of the National Company Law Tribunal (NCLT) has approved the sale of Uttam Value Steel Ltd and Uttam Galva Metallics to a joint consortium of CarVal Investors and Nithia Capital Resources Advisors for ₹2,300 crore, reported Mint.
"This transaction has been a great learning curve for us in doing business in India. In the process, we have been successful in fostering stronger ties with local institutions and businesses," said Rajib Guha, Partner at Nithia Capital.
Uttam is an integrated mid size flat steel producer with annual capacity to produce c. 0.7 million tons of crude steel. "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 investment manager said in a statement.
On future outlook of business in India, Jai Saraf, founder and chief executive officer of Nithia Capital said, "The group envisions to create a consolidated steel operating platform of up to two million tons of steel production per year in India through acquisition and organic growth. We have been looking at multiple steel acquisition opportunities in India over the last few years and we are confident that we will continue to grow and build further on the success of Uttam."