Weeks after the acquisition of Lloyds Steel, the Miglani family has charted out plans to turnaround the company within one year.
Ultimate Logistics Solutions and Metallurgical Engineering and Equipments, the family-owned companies have invested Rs 647 crore (including the open offer of Rs 77 crore) in Lloyds Steel.
Ankit Miglani, Deputy Managing Director, Uttam Galva Steel, said having infused the requisite capital, the immediate target would be to reduce the cost of fund and increase production to 750,000 tonnes from 500,000 tonnes.
“We are also negotiating with banks for Rs 1,500-crore line of credit which will be used for sourcing raw material and meet other operational expenses. Besides, we will bring down cost of debt by refinancing and tying up a long debt of Rs 300 crore,” he said.
After enhancing the production, the marketing strategy will be reworked to make the company profitable and double EBITDA to Rs 260 crore within a year, he added.
BOARD rEcast
Apart from rechristening Lloyds Steel as Uttam Value Steels, the board was reconstituted on Friday with the induction of Rajinder Miglani, Ankit Miglani and Rajiv Munjal in place of the erstwhile promoter-directors.
Miglanis have acquired 58.35 per cent in Lloyds Steel through preferential allotment and an open offer.
The company has a steelmaking capacity of one million tonnes a year in Maharashtra and has reported losses of Rs 213 crore in last two financial years.
It has a long-term debt of Rs 441 crore and debt-equity ratio of one is to one.
STRATEGY
Uttam Value Steel plans to concentrate on producing high quality steel for specialised application in power, oil and gas and infrastructure sector to enhance its margins.
On backward integration, Miglani said Uttam Galva currently supplies 80 per cent of Lloyds Steel raw materials.
Miglanis are open to tapping private equity investment and investment from ArcelorMittal, which currently owns 33.80 per cent in Uttam Galva.
Expressing confidence that the shortage in iron supply will ease, Miglani said the industry has been impacted by the ban on iron ore mining and things will look up as the mining ban cannot be a permanent feature.
“Even as global demand is expected to remain low, a revival in India is expected in couple of months. What is more worrying than demand is the fresh capacity that will go on stream in six months time,” he said.