Sanjeev Gupta’s GFG Alliance on Tuesday announced the completion of its acquisition of Adhunik Metaliks Ltd and Zion Steel Ltd in a Rs425 crore ($60m) cash deal. The transaction marks the Alliance’s entry into India – one of the world’s fastest growing steel markets.
GFG Alliance proposes to introduce its `Greensteel’ model to revive the steel plants – combining steel recycling with low carbon and renewable power sources – to create a more sustainable, competitive operation serving local markets.
“Today marks an important milestone in our global steel strategy with the purchase of Adhunik Metaliks and our entry into India – one of the fastest growing and most vibrant steel markets in the world. We see huge potential in this business through the introduction of our `Greensteel’ model to create a competitive, sustainable operation to serve the local market,” executive chairman of GFG Alliance, Sanjeev Gupta, said.
“It has been a challenging journey to get us to this stage, but we now look forward to starting work in partnership with all stakeholders to revive these plants and bring employment back. On a personal note, it is great to be investing in the country where my family began in the steel industry a generation ago,” the India-born British businessman said.
Adhunik is an integrated steel plant located at Chadrihariharpur near Rourkela in Odisha. The plant has both blast furnace and electric arc furnace steel making facilities with 0.5 million tonnes per annum capacity, and a 34MW captive power plant. Adhunik, along with Zion Steel, its associated steel rolling facility, has a combined rolling capacity of 400,000 tonnes per annum. The plants supplies products for the automotive, energy, engineering and oil and gas sectors.
GEF Alliance said the immediate focus will be on reviving and restoring the facilities and operations, and once stabilised the business will begin its integration into the Liberty Steel Group. In October 2019, GFG Alliance announced the consolidation of its steel businesses into one global entity – the Liberty Steel Group – the 8th largest steel producer in the world outside China, with operations in 200 locations in ten countries. Liberty Steel Group has a target to become carbon neutral by 2030 (CN30).
Adhunik owed banks over Rs5,300 crore and is under the under insolvency process with the National Company Law Appellate Tribunal (NCLAT) for recovery of loans extended by banks and other financial institutions.
The announcement comes after the NCLAT asked GEF Alliance to make payment by 14 February 2020, bringing to close a long-pending insolvency process.
Though GFG Alliance's bid was accepted in 2018, the case went into litigation.
Gupta, who started off in the trading business, has created a global steel empire buying loss making units across the world. Liberty Steel Group now produces 18 million tons a year, making it the 17th largest steelmaker in the world.
"It has been a challenging journey to get us to this stage, but we now look forward to starting work in partnership with all stakeholders to revive these plants and bring employment back. On a personal note, it is great to be investing in the country where my family began in the steel industry a generation ago," Gupta said.