CoC Approves AM Mining’s Resolution Plan for Uttam Galva
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CoC Approves AM Mining’s Resolution Plan for Uttam Galva

The Committee of Creditors of Mumbai based Uttam Galva Steel, through e-voting process which was held between 17 May 2021 and 2 June 2021, has

The Committee of Creditors of Mumbai based Uttam Galva Steel, through e-voting process which was held between 17 May 2021 and 2 June 2021, has approved ArcelorMittal Group’s subsidiary AM Mining India Private Ltd’s bid for the distressed steel company by 100% vote share. According to sources close to the development, the ArcelorMittal arm has agreed to pay around INR 4,000 crore as against claims of around INR 20,650 crore, with bankers and other financial creditors claim accounting for INR 9,232 & INR 11,000 crore from operational creditors, which include vendors, employees, etc. ArcelorMittal India Private Ltd has the largest share of INR 6,476 claim among the financial creditors. Now, the resolution plan would be presented before the NCLT for final approval.

In November 2019, Uttam Galva Steels had defaulted to the tune of USD 6.67 million on its overseas loan or external commercial borrowing facility with the total amounting to around USD 25 million, reduced from USD 50 million after a settlement. The facility was extended by State Bank of India in May 2013. After a reminder in January 2020 from SBI, Uttam Galva Steel expressed its inability to pay on account of bad financial condition. Subsequently, in March 2020, SBI dragged the firm to the National Company Law Tribunal’s, Mumbai bench. SBI insolvency application was admitted by the Mumbai bench of National Company Law Tribunal in October 2020. As many six companies including JSW Steel, JSPL and Vedanta had submitted their expression of interest. However, only AM Mining India had submitted a resolution plan. The CoC took less than 270 days after the admission of insolvency application to approve the resolution plan.

A large part of Uttam Galva Steel’s loans was taken over by ArcelorMittal from public sector banks to bid for Essar Steel in 2018. ArcelorMittal had made payments worth INR 4,922 crore (excluding interest) to secured financial lenders

With 250 acres of land and more than 100 000 square metres of covered shed, the Uttam Galva Steel plant is located near Khopoli, which is 100 km away from Mumbai. As per the firm’s website, the plant has a facility for cold-rolling HR coils, with a capacity of 1,000,000 tonnes per year and annual galvanising capability of 750,000 tonnes. For FY 20-21, its net loss narrowed to INR 235.5 crore as compared with net loss of INR 1,414.2 crore from a year ago. Sales rose 25.5% to INR 654.2 crore from INR 521.2 crore in FY20.

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