Miglanis to raise Rs.1,800 crore
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Owners of Uttam Galva Steels plan to raise funds from PSBs to revive Lloyds Steel
The Miglani family, owners of Uttam Galva Steels, plans to raise R1,800 crore from state-run banks within the next three months to provide for Lloyds Steel's working capital needs, after taking management control of the ailing steelmaker.
The Miglanis, which recently acquired a 58.35% stake in Lloyds Steel, outlined plans to revive the steelmaker's business by lowering financing costs, as well as improving product mix and operational efficiency. The plan includes doubling the company's earnings before interest, taxes, depreciation and amortisation (EBITDA) in the next four quarters and increasing the facility's capacity utilisation by 50% over the next year.
Rajinder Miglani, Ankit Miglani and Rajiv Mundal have joined Lloyd's Steel board, replacing the company's former promoters who resigned, including Mumbai-based industrialist Mukesh Gupta. The Gupta family continues to hold 23% stake in the company.
Lloyds Steel shares surged nearly 20% to close at R13.71 on Friday on the BSE, as investors welcomed the changes.
The Miglanis, which have so far invested R647 crore in the company including R77 crore on buying equity through an open offer, are in talks with PSU banks to raise R1,500 crore in fund-based and R300 crore in non-fund based capital, Uttam Galva's deputy managing director Ankit Miglani told reporters at a press conference on Friday.
"Currently, Lloyds doesn't have any working capital limits and borrows money from secondary and tertiary markets at a cost of 24-25%, this will drop significantly once we get support from PSU banks and we're confident of achieving this by the first quarter," Miglani said.
Lloyds Steel, which has a steelmaking capacity of 1 million tonnes per annum (MTPA), has reported net losses of R213 crore in the last two financial years. It has a total long term debt of R441 crore. The company's exit from BIFR has opened it up for lending from PSUs.