Vedanta Wins Bid To Buy Insolvent Electrosteel Steels
Metals-to-oil giant Vedanta Ltd. won the bid to acquire debt-laden Electrosteel Steels through India’s new bankruptcy process, adding steel to billionaire Anil Agarwal’s sprawling empire.
Vedanta was declared as the successful resolution applicant by the lenders to Electrosteel Steels under the corporate insolvency resolution process, it said in a stock exchange filing. The company was issued a letter of intent by the Electrosteel creditors which it accepted, the filing added. Tata Steel Ltd. too had bid for the steelmaker.
The transaction will be subject to regulatory requirements and final approval by the National Company Law Tribunal.
Electrosteel Steels was among the first 12 large corporate accounts that the Reserve Bank of India identified last year in June for insolvency resolution. It owes lenders more than Rs 13,000 crore—about Rs 5,000 crore to State Bank of India alone—according to information available on the steelmaker’s website. It owes operational creditors Rs 191.6 crore, the resolution professional had acknowledged.
The proximity of Electrosteel Steels’ assets in Jharkhand to one of Vedanta’s iron ore mines makes it a “good match”, mining tycoon Agarwal had earlier told BloombergQuint. The entry into steel was aimed at converting iron ore from its mine as it is more profitable, he’d added.
Vedanta had emerged the highest bidder after quoting Rs 4,500 crore for the steelmaker, according to an Economic Times report on Jan. 9 citing unnamed persons. The runner-up Tata Steel, which too is looking to shore up its domestic presence, had bid around Rs 3,500 crore. Apart from them, Renaissance Group and Edelweiss Asset Reconstruction Company Ltd. had also submitted bids.