As per market sources, South Korean steel giant, POSCO is helping Uttam Galva to find an investor for revival of its steel plant in Wardha, Maharashtra.
In August 2015, Uttam Galva and South Korean steel giant POSCO entered in to an agreement to set up a 3 MnT integrated steel plant in Wardha, Maharashtra with total estimated investment of USD 3 billion.
The company is a joint venture between the two under the name POSCO Uttam Galva Metallics where POSCO have stake of 20% and Shree Uttam Steel and Power Ltd have majority stake of 80%.
The project marked an entry of POSCO into the domestic market after it battled regulatory hurdles for about a decade for its proposed USD 12 billion steel plant in Odisha.
The project was expected to be completed by 2019 in two phases of 1.5 MnT capacity each and the first phase was expected to start by mid of 2016. However the Uttam Galva group got mired with its debt problems and the project didn’t take place.
Now Uttam Galva and POSCO are in discussions with Chinese infra major, Tidfore to pick up a stake in the Uttam Galva Metallics. The tie up is likely to be a three-way venture between Uttam Galva, POSCO and Tidfore.
The equity infusion from Tidfore will be subject to fresh lending from banks and will thus reduce the unviability of the project.
Only recently, Uttam Galva Metallics flagship company, Uttam Value Steels (UVS) referred itself to BIFR as sick unit after its accumulated losses for year 2015-16 exceeded its total net worth.
As on Mar’16, Uttam Value Steels had a negative networth of INR 214 crore against loss of INR 520 crore.
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