Cargill to buy two small India steel mills

A joint bid by global trading firm Cargill and the Asset Reconstruction Company India (Arcil) to acquire bankrupt Indian steel companies Uttam Value Steels and Uttam Galva Metallics has been accepted by Uttam's lenders, pending approval from the country's bankruptcy court.

Cargill's investment arm Carval Investors and Arcil bid 24bn rupees ($360mn) for the two companies, which are part of the Uttam Galva Steels group. Uttam Value Steels and Uttam Galva Metallics have 1mn t/yr of installed hot-rolled coal (HRC) production capacity at Wardha in the western state of Maharashtra. But they have not yet started HRC production because of funding challenges and are instead re-rolling imported HRC.

The Cargill-Arcil acquisition also includes re-rolling facilities at Khopoli on the outskirts of Mumbai, with cold-rolling capacity of 1mn t/yr, galvanising capacity of 750,000 t/yr and a 90,000 t/yr colour-coating line.

Separately, a bid by private-sector Indian firm JSW Steel to acquire 3.5mn t/yr producer Bhushan Power & Steel is still awaiting approval from the bankruptcy court. JSW beat fellow private-sector Indian company Tata Steel and the UK-based Liberty group to acquire Bhushan Power.

A joint bid by global producer ArcelorMittal and Japan's Nippon Steel to acquire the 10mn t/yr Essar Steel has been approved by both the bankruptcy court and a bankruptcy appellate tribunal. But the Supreme Court has ruled the acquisition cannot go ahead until the appellate tribunal decides on the final proportion of funds to be distributed among various creditors. The Supreme Court did not raise any objections to the identities of the buyers or the value of the acquisition.

Final approvals for the Bhushan Power and Essar Steel acquisitions would conclude the process of selling off large steel companies with big debts. JSW Steel has acquired Monnet Ispat, Tata Steel has bought Bhushan Steel and Indian resources conglomerate Vedanta has acquired Electrosteels.

Smaller companies such as the Uttam Galva units are likely to continue to be offered in bankruptcy auctions, but similar proceedings seem unlikely for any other integrated steel producers in the medium term.