Evonith targets aggressive ramp-up in steel capacity by 2030

According to Chairman Jai Saraf, the company plans to expand capacity from the current 0.8 mtpa to 6 million tonnes per annum (mtpa) in the next three to five years.

“At Evonith Steel, we can produce up to 3.5 million tons organically,” he said. Mint in an interview Wednesday. “The remaining 2.5 million tonnes will come from inorganic growth and reversing these new purchases to produce more to reach 6 million tonnes.”

With the planned expansion to 6 mtp annual capacity, the company will become only the seventh largest player after JSW Steel Ltd, Tata Steel Ltd, Steel Authority of India Ltd, Jindal Steel Ltd, ArcelorMittal Nippon Steel India and Rashtriya Ispat Nigam. Evonith will move in line with Lloyds Metal and Energy, which plans to scale up to 4 mtpa in a similar time frame after starting production next year.

Evonith currently has plans to reach 1.4 million tonnes of steel production capacity by next year. Following this, it plans to invest in brownfield expansion of its factory, including new blast furnaces, in-plant facilities and finishing lines at Wardha in Maharashtra. ₹5,500-6,000 crore.

To finance this capital expenditure, the company plans to list on Indian stock exchanges in the next 18 to 24 months, Saraf said, adding that the remaining capital expenditure will be financed through redistribution of internal accruals.

The former Mittal Steel executive did not disclose any details about the size of the IPO and said they were yet to appoint bankers for the listing.

In Wardha, Maharashtra, the company currently produces 0.8 mtpa of finished steel and expects to increase this figure to 1.1 mtpa by the end of the year once its ductile iron pipe plant becomes operational in December. Saraf expects the capacity to reach 1.4 million tons by the end of next year.

Evonith plans to continue inorganic growth beyond 3.5 million tonnes and acquire stressed steel assets to reach the 6 million tonnes target.

Acquisition and return strategy

In December 2020, Nithia Capital took its first step into the Indian market by acquiring Uttam Galva Metallics Ltd (UGML) and Uttam Value Steels Ltd (UVSL) along with CarVal Investors. ₹2,000 crore marks the beginning of the current Evonith Steel.

An executive who wished to remain anonymous said CarVal was no longer a shareholder and had left the company, saying that 12.5 percent of it is now owned by a Singaporean private equity fund and Nithia Capital is the majority shareholder.

Evonith focuses on distressed assets with capacity under one million tonnes and where promoters are willing to cede control, and then turns the business around.

Nithia Capital’s latest acquisition was Topworth Urja and Metals Ltd. ₹300 crore, this is the third steel purchase in India.

“A significant rehabilitation and growth investment plan is envisaged to increase the steel production operation to 0.5 mtpa and enable the power plants to produce at full capacity,” Nithia said in a press release. he said.

Wardha steel operations have their roots in the plant’s origins with Gupta Tubes and Pipes Pvt. It dates back to 1970 when it was founded. Later, in 1986, Lloyds Steel Industries Ltd. It was acquired by Uttam Group in 2012 and renamed as Uttam Value Steels Ltd. Following the 2020 acquisition, the company was rebranded as Evonith Metallics (EML) and Evonith Value Steel (EVSL) under the Evonith Steel umbrella.

EML supplies hot metal/pig iron for steelmaking to EVSL and third parties.

Pig iron is raw molten iron used as the basic input in steel making. EVSL takes this pig iron and transforms it into steel products such as hot rolled coils, cold rolled coils, galvanized coils and sheets, and over time, ductile iron pipes, all of which are used in automobiles and consumer durables.