Sajjan Jindal, chairman of India’s largest steelmaker JSW Steel Ltd., said his company wasn’t allowed to bid for the insolvent Essar Steel Ltd. even after lenders rejected two final resolution plans and invited fresh offers.
The company had written to Essar Steel’s committee of creditors making a case to enter the bidding process without a partner, Jindal said after a press conference announcing a new facility in Texas. “Unfortunately, they felt that if we were given an opportunity they would have to advertise it in the newspapers and call for the bids again...people may have to call for the data centre to be opened.”
In their own discretion and their thought process, they did not want to give a new entrant a chance...If they don’t want more money, it’s up to them.Sajjan Jindal, Chairman, Managing Director, JSW Steel
Numetal Mauritius and ArcelorMittal India had emerged as the final two bidders for Essar Steel. The creditors rejected both their resolution plans calling for a re-bid from original six bidders. Numetal and ArcelorMittal’s bids have been under a cloud after the government amended the Insolvency and Bankruptcy Code late last year to stop defaulting promoters from bidding for insolvency assets. The rebidding process for Essar Steel is now open till April 2.
JSW Steel didn't participate in the earlier bid because the company was busy with the bidding process for Bhushan Steel, Jindal said. JSW Steel lost out to Tata Steel, which emerged as the highest bidder.
Numetal, backed by Russia’s second largest bank VTB group, has Rewant Ruia, son of Essar Group co-Founder Ravi Ruia, as a minority shareholder in the company. The consortium is willing to buy out Ruia’s stake in the company. ArcelorMittal India was a 29 percent shareholder and co-promoter in Uttam Galva Steel Ltd. that’s been declared a non-performing asset. The India arm of the Luxembourg-based company exited its Uttam Galva stake earlier this year.
That would make them eligible for bidding under the amended bankruptcy law. Jindal said maintaining the spirit of the law is very important. “If the whole law is amended to say that the defaulting participant is allowed to participate, then it's fine. But if the defaulting promoter cures itself by selling shares, then it's mockery of system.”