According to media reports, ArcelorMittal Netherlands BV, controlled by Lakshmi Mittal, is likely to build a one million tonne (MT) steel plant at Satarda in Maharashtra through a joint venture (JV) with Uttam Galva Steels Ltd (UGSL).

ArcelorMittal Netherlands BV, a subsidiary of ArcelorMittal, has made an open offer to raise its stake in USGL to 35% at Rs120 per share, which closed on Thursday.

Moneylife had earlier reported on 5 September 2009 that LN Mittal was likely to make an open offer to acquire another 29.4% in UGSL, making ArcelorMittal an equal partner with the Indian promoter Rajinder Miglani. Under the agreement, Mr Mittal will purchase a 5% stake (at Rs120 a share) in Uttam Galva followed by an open offer to acquire another 29.4%, making ArcelorMittal an equal partner with the Indian promoter Rajinder Miglani. Uttam Galva has a steel production capacity of 750,000 tonnes per annum.

USGL had informed bourses on 4^th September about its co-promotion agreement with ArcelorMittal Netherlands BV.

Sources close to the deal had earlier told Moneylife that ArcelorMittal will partner with the Miglanis to set up a 2MT Hot Rolled Coil (HRC) project at Redi near Goa. The Miglanis already own 750 acres of land there, which once belonged to Usha Ispat, controlled by Vinay Rai. Usha Ispat had a pig iron plant at Redi, which was auctioned under the provisions of the Sarfaesi Act, 2002. The land is also located near a jetty and is close to the raw material source.

According to sources, Uttam Galva had all the permissions in place to get the project off the ground very quickly. LN Mittal will be the dominant partner in the Goa project with a 70% holding while Miglani will own 30% to start with.

With this partnership, Uttam Galva, a standalone galvaniser, has entered the big league of steel players in India.

According to media reports, State Bank of India (SBI), Punjab National Bank, Canara Bank and IDBI Bank Ltd will fund the project with the lead syndicator being SBI. So far Rs2,100 crore has been sanctioned and the rest will be funded by promoters through equity.

— Ravi Samalad