ArcelorMittal bets big on insolvent firms to build its India empire

World's largest steel co set to buy Uttam Galva

The world’s largest steel maker, ArcelorMittal, is all set to acquire yet another insolvent firm in India–Uttam Galva Steels--by submitting a resolution plan to its lenders. With this, ArcelorMittal will be taking over yet another company in India that was sent to the insolvency courts for debt resolution following a default.

“Our experience with ArcelorMittal has been good so far and we made the highest recovery where the company had made a bid. Essar Steel acquisition resolution remains the highest with ArcelorMittal offering Rs 42,000 crore on a Rs 49,000 crore default,” said a banker close to the development.

Uttam Galva's biggest creditors were ArcelorMittal India and ArcelorMittal Luxembourg, with 75 per cent of the total debt when it took over Rs 4,992 crore worth debt from public sector banks just before the acquisition of Essar Steel in 2018. Following a Supreme Court order, ArcelorMittal had to take over Uttam Galva’s debt from State Bank of India to become eligible for acquiring Essar Steel as it had a stake in Uttam Galva, which was a bank defaulter. As per IBC, a defaulter is not allowed to bid for bankrupt companies.

ArcelorMittal has also acquired Odisha Slurry Pipeline,  which owns and operates a 253-km slurry pipeline to transport raw materials, for Rs 2,358 crore. The National Company Law Appellate Tribunal cleared the sale early this year. In 2021, ArcelorMittal also acquired Essar Steel Odisha for Rs 450 crore, a captive power project of Essar Steel, from State Bank of India and Edelweiss.  In 2020, ArcelorMittal and its partner Nippon Steel acquired Bhander power plant, a 500 MW natural gas-based thermal plant at Hazira Gujarat which was earlier owned by Essar Steel from Edelweiss Asset Reconstruction Company (ARC), as per statistics available with Bloomberg.

“We cannot rule out the company participating in more debt resolution in future provided it makes sense for its portfolio,” the banker said.

A ArcelorMittal spokesperson declined to comment on the Uttam Galva transaction.

Uttam Galva's plant in Maharashtra was shut down for a long period early this year following a labour strike. For the quarter ended December last year, UGSL's reported revenues of Rs 216 crore and a loss of Rs 56 crore.