Uttam Galva out of race to buy US co

KOLKATA: Uttam Galva Steels (UGSL) has lost out in the race to acquire Detroit Cold Rolling. The Mumbai-based manufacturer of auto grade galvanised steel was in the fray for a complete buyout or a joint venture with the 1-m tonne US steel company.

The ultimate winner was Ukraine’s Steel Rolling Technologies, which put in a bid of $20m.

Besides Uttam Galva, which was the only Indian company in the fray, others in the race included leading global steel companies like Duferco of Switzerland and Steel Technologies of the US. Apart from the Ukraine company, all the other bids were believed to be in the region of $15-16m.

“UGSL and Duferco were among the front-runners till the Ukrainian company came along with a substantially higher bid. We do not think Detroit Cold Rolling is a viable acquisition at that price,” Ankit Miglani, director, UGSL, told ET from Mumbai.

UGSL has been in talks with Detroit Cold Rolling since November ’05. Strategically located, DCR’s facility in the “auto hub” of Michigan would provide UGSL with the capability to provide “just in time” delivery to the auto industry in the US.

In particular, UGSL’s strategic focus to higher profitability by expanding its portfolio of value-added auto-grade steel could get a major fillip with the DCR facility. So far, UGSL has been unable to cater to the auto industry in the US, since markets require “just in time” deliveries that can be made possible only with plants located within the US.

Secondly, UGSL would have cut down on the export distribution chain by selling directly to the auto manufacturers. The latest development comes at a time when UGSL’s products are increasingly finding a market in the US, China, Australia, and other European countries, between 10,000 and 20,000 tonnes per month to the US alone.