Uttam Galva, Bhushan Steel, APL Apollo eye Lloyds Steel

It seems to be the time for consolidation in the Indian steel industry.

Lloyds Steel, the loss-making company, is said to be the next on the block after Ispat Industries and Bellary Steels, which were acquired by JSW Steel recently.

Sources said three companies — Uttam Galva, Bhushan Steel and APL Apollo — are in the fray for Lloyds, which has an annual steelmaking capacity of 0.6 million tonne.

For Uttam Galva, it is an unlisted subsidiary promoted solely by the Miglani family which is eyeing Lloyds.

“The company is currently doing the due diligence and expectations are that the deal will be sealed at Rs30.46 per share,” said a source.

When contacted Ankit Miglani, director, Uttam Galva, said, “All I can say is that Uttam Galva is not interested in Lloyds and I am not in a position to comment on anything else.”

Lloyds which has two divisions under this company — steel and engineering — has a plant in Wardha, Maharashtra.

A source said the promoters of Uttam Galva are looking at buying the company minus the engineering division.

“Both the companies could even go for a joint venture or an alliance as Lloyds had been selling raw materials to Uttam Galva and both the companies share over 30 years of partnership,” the source said.

Lloyds Steel has a debt of Rs800 crore and cash of Rs160 crore. There are 39.81 crore outstanding shares of the company.

“At a price of Rs30.46 per share plus the debt and minus the cash, the size of the deal is close to Rs1,850 crore,” he said.

On a per-tonne basis, the enterprise value (EV) of the company comes to $404 million and an EV/tonne as $666 which is much less than Ispat Industries’ over $800 EV/tonne.

“This is mainly because the plant of Lloyds Steel is older than Ispat’s and hence the depreciation,” the source said.