Evonith Steel (formerly Uttal Galva Metallics and Uttam Value Steel) plans to more than double capacity to 3.5 million tonnes per annum from 1.4 mtpa, with an investment of Rs 5,500 crore – Rs 6,000 crore over three years.

The promoters of the company, Nithia Capital, plan to fund the expansion through internal accruals, debt, and an initial public offering in 18-24 months.

Revival and growth journey

In 2021, UK-based stressed asset management companies, Nithia Capital and CarVal Investors, through an NCLT-driven process, acquired Uttam Galva Metallics and Uttam Value Steel for about Rs 2,000 crore.

In the last five years, the company based out of Wardha, Maharashtra, has increased its finished steel capacity to 1.1 mtpa (including the proposed pipe plant) from 0.5 mtpa, with an investment of Rs 1,500 crore from internal cash flows. The new 0.3 mtpa Ductile Iron Pipe Plant will go on stream by December.

Jai Saraf, Chairman of Evonith Steel and Founder and CEO of Nithia, said that in the last five years, the company has created a net current asset of Rs 1,400 crore, which was a net current liability prior to the acquisition.

“We have not distributed one penny as dividend to the shareholders,” he said.

Financial strength and outlook

The company has been running at an EBITDA run rate of ?1,200 crore, and next year it will be about Rs 1,500 crore. Gross debt is about Rs 1,700 crore, while net debt is about Rs 1,350-1,400 crore.

It has liquidity of Rs 300-350 crore and unutilised credit lines of over Rs 500 crore.

“Our compounded annual growth rate in terms of volume increased over 30 per cent consistently for over five years and we intend maintain it through an aggressive growth plan and strong balance sheet,” he said.

Product portfolio and market focus

Currently, the company produces about 8 lakh tonnes of flat steel and 5 lakh tonnes of hot-rolled coil. The OEM customers include BHEL and large pipe and cylinder makers.

It also produces about 3 lakh tonnes of galvanised steel, sold to OEMs tapping into the Indian Railways and non-exposed automotive industries.

The company plans to tap into the exposed automotive and white goods markets after expanding to 3.5 mtpa, he said.

Ratings and strategic edge

Evonith Steel has received a ratings upgrade to an ‘AA- (Stable) rating by Crisil Ratings. The rating highlights the company has a healthy performance, driven by efficient operations, strategic location in central India with proximity to raw material sources, and a strong financial risk profile.

Source: The Hindu Business Line 

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