Uttam Galva group confident of turning around Lloyds Steel

Written by Agencies | Mumbai | Updated: Dec 29 2012, 07:28am hrs
Uttam Galva group, which recently acquired majority stake in the ailing Lloyds Steel, on Friday said that it would turn around the fortunes of the acquired company and planned to double its operating profit in about a year.

"We are confident of turning around the company. We hope that Lloyds Steel will attain net profit level in next one year and its EBIDTA will be doubled in that period," Deputy Managing Director of Uttam Galva Steels, Ankit Miglani told reporters here.

Uttam Galva Group, promoted by Migalni Family, has acquired 58.35 percent stake in Lloyds Steel, which posted net loss of Rs 213 crore in the last two financial years. Lloyds Steel, with a steel making capacity of 1 million tonne per annum, has a total long-term debt of Rs 441 crore on its books.

The company's board has now been reconstituted after the takeover by the Miglani family, though the erstwhile promoters would continue to hold their stake at about 21 percent for now.

Talking about the revival strategy for the company, Miglani said, " Lloyds Steel used to raise money for working capital from secondary and tertiary market which increased its cost of funds to 24-25 per cent. Post-acquisition, we are planning to raise working capital from public sector banks, which will significantly reduce the cost of funds."

He also said it has already started discussions with the some PSU banks and expects to get a letter of credit worth Rs 1,500 crore.

"We will also increase the operational efficiency with better product mix," Migalni said, adding that the company plans to increase the production capacity to 0.75 million tonne per annum against 0.5 million tonne now.

Referring to reduction of debt, Miglani said the company is rather under-leveraged with a debt-equity ratio of 1:1 now. Responding to a query on merger or delisting plans for the company, he said the Uttam group has invested Rs 647 crore in Lloyds Steel, including Rs 77 crore spent on open offer to buy shares from the market but the new promoters have no plans to delist or merge the company with Uttam Galva as of now.

However, the name of the company may be changed.

"We are mulling to change the name of the company to Uttam Value Steels. However, nothing has been finalised yet," Miglani said.

Talking about funds infusion by strategic investor, he said," We are open to the idea of any strategic investor coming on board by way of private equity."

When asked if ArcelorMittal will invests in the company, Miglani said the company was open to the idea.

ArcelorMittal holds around 33 percent in the Uttam Galva Steel.