Uttam Galva's deal hunger left three Miglani steel firms in bankruptcy court

The Mumbai-based Miglanis were known for eye-catching deals: in 2009 they sold ArcelorMittal a 32% stake in flagship Uttam Galva Steels (UGSL), giving the world's largest steelmaker its Indian toehold after aborted greenfield attempts. In 2012 they acquired a controlling stake in Lloyds Steel Industries, renamed Uttam Value Steels (UVSL) — 'they had just bitten off more than they could chew', one official said. The purchase price was low, but the promoters sank about Rs 2,000 crore into upgrading and modernising the plant.

From 2015-16 the wheels came off: UGSL reported its first losses, UVSL's net loss widened to Rs 521.74 crore, and its net worth was wiped out. Raw-material costs spiked while cheap Chinese hot-rolled coil imports drew safeguard duties; banks tightened funding, projects stalled — including the Posco MoU for a three-million-tonne plant — and by March 2016 Canara Bank and Punjab National Bank had classified UGSL as an NPA. NCLT admitted insolvency petitions for UVSL and UGML in 2019, and for UGSL on 1 October 2020 on State Bank of India's petition, UGSL's debts standing at Rs 7,469 crore.

The ArcelorMittal twist: UGSL's NPA status blocked ArcelorMittal from bidding for Essar Steel under the insolvency law, so it sold its UGSL shares back to the promoters at Rs 1 a share (bought at Rs 120). The Supreme Court ruled the device ineligible anyway but allowed ArcelorMittal to clear UGSL's dues — Rs 6,100 crore in 2018, making it UGSL's largest creditor. SBI, which had withdrawn a 2018 petition after that payment, returned in March 2020 as UGSL defaulted on the remainder.

The group expanded into heavy upstream steel with promoter money and optimism, then had no cushion when 2015 commodity and import pressure arrived.

Starved of bank funding after the NPA classifications, the Posco project and other plans stalled, compounding the slide.

Even a friendly relationship with the world's largest steelmaker could not fix a capital structure once the lenders moved.

Eye-catching deals are not a balance sheet: an acquisition priced cheap but needing Rs 2,000 crore of upgrades is a bet that funding stays friendly — and banks tighten the moment performance slips.

Resolution plans for UVSL and UGML by a CarVal Investors-Nithia Capital consortium were approved by the NCLT in April 2020; sources expected ArcelorMittal to bid for UGSL through insolvency, giving it a clean asset. The Miglanis, having lost control of the key companies, focused on a smooth handover to the winning bidder.