Electrosteel Steels Ltd. has become the first of the twelve large stressed accounts to be resolved under the Insolvency and Bankruptcy Code.
The National Company Law Tribunal has approved the resolution plan submitted by Vedanta Ltd. for Electrosteel Steels, a person directly familiar with the matter told BloombergQuint. This was confirmed by Anil Agarwal, chairman of the Vedanta Group in an interview to BloombergQuint. The Vedanta Group will look to complete the process of taking over Electrosteel Steels very shortly, Agarwal said. He added that the group will make all efforts to turn the stressed asset around.
Law firm Shardul Amarchand Mangaldas advised Dhaivat Anjaria, the resolution professional in the case. Sapan Gupta, national practice head of banking and finance at the firm led this team.
Electrosteel Steels was among the first 12 large corporate accounts that the Reserve Bank of India identified in June last year 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.
Lenders have taken a 55 percent haircut on the outstanding debt, said the person quoted above while speaking on condition of anonymity. 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 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.