Wednesday, 12 December, 2018


Lakshmi Mittal and Ruias to battle it out for Essar Steel

ArcelorMittal makes bid for India’s Essar Steel assets Lakshmi Mittal and Ruias to battle it out for Essar Steel
Patty Aguilar | 15 February, 2018, 06:07

Mittal expressed optimism about the Indian steel industry and said his company, ArcelorMittal, has submitted a detailed plan that would address numerous operational issues that dragged Essar Steel into bankruptcy.

In its offer, AMIPL set out a detailed industrial plan for the debt-laden steel maker to address its operational issues and to improve its performance and profitability. "With our industry expertise and renowned operating prowess, we believe we are uniquely equipped to implement a successful turnaround which would be beneficial to Essar's stakeholders". Even as reports suggested that four bidders, including Tata Steel and Vedanta Resources were also keen to participate in the bidding process for Essar Steel and submit their resolution plans, only ArcelorMittal and Numetal submitted their bids on Monday.

Numetal had recently bought a 70 per cent stake in Orissa Slurry Pipeline India that owns a 253-km slurry pipeline which moves half of Essar Steel's iron ore.

A source close to the development, however, said that Mittal may have to face a stiff challenge as the Ruia brothers (Shashi and Ravi Ruia) want to be with Essar Steel even though with a minority shareholding. It will also be hard for any new player to operate the Essar Steel plant at Hazira without access to the pipeline.

The source added that the appointed legal entity will analyse the two bids and see if they meet the eligibility criteria and will "submit it to the CoC next week ..."

Mittal said Essar Steel is a "compelling opportunity" to "enter the high growth Indian steel market".

Details of the bids from Numetal and ArcelorMittal are not known immediately.

"The rules as given by the amended bankruptcy code are clear - related parties are not allowed to bid for a firm undergoing bankruptcy proceedings", said Sanjay Bhattacharya, a former managing director of the SBI, a key lender to Essar Steel.

Mittal said Essar benefited immensely from its global expertise.

Bankers said the plan of Numetal Mauritius to buy majority stake in Orissa Slurry pipeline infrastructure belonging to the Srei Infrastructure may also have titled the scales in favour of the Numetal as this pipeline supplies more than half of the raw material required by Essar Steel's plant in Hazira in Gujarat.

Essar Steel is one of India's largest steel producers, with annual production capacity of around 10m tonnes.

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