Three bidders, including two new players, have submitted resolution plans after lenders called for fresh bids in Essar Steel Ltd.’s insolvency process.
These include a joint venture between ArcelorMittal India and Nippon Steel & Sumitomo Metal Corp, Nu Metal & Steel Pvt. Ltd, in which JSW Steel is an investor, and the Vedanta Group, according to two people in the know who spoke to BloombergQuint on the condition of anonymity.
Of the three, ArcelorMittal-Suitomo JV had participated in the earlier bidding as well. Numetal, a VTB-led consortium had participated but in a different avatar – Numetal Mauritius – that included Rewant Ruia as minority investor. In this rebid, Numetal has dropped Ruia and acquired a new partner in JSW Steel.
In January, JSW Steel founder Sajjan Jindal had told BloombergQuint that he was not interested in Essar Steel. Instead, JSW had its eye on Bhushan Steel and Bhushan Power & Steel, both of which it lost to Tata Steel Ltd. in the NCLT process.
Explaining the change of heart, JSW Steel Joint Managing Director Seshagiri Rao told BloombergQuint that earlier the company was focussing only on the East Indian region because of limited resources. “In that process we were outbid by competition. Now Essar Steel has come for rebidding and JSW Steel wants to pursue this opportunity,” Rao added.
After winning the bid to acquire insolvent Electrosteel Steels Ltd., Vedanta is now eyeing Essar Steel for value addition, Chairman Agarwal told BloombergQuint. “We got Electrosteel and thought putting this together we could be sizeable, in-line with other players having similar capacities.” The deal could be complementary as Vedanta needs Essar to convert its iron ore to steel, Agarwal said. At the same time Essar can make use of gas produced by Cairn India Ltd. which has a pipeline near Essar’s plant, he added.
Lenders after rejecting earlier resolution plans, had invited fresh bids from the six companies that had originally submitted expressions of interest for Essar Steel in December. Tata Steel and Steel Authority of India Ltd., which participated in the previous round, chose to stay out of this one.
Numetal Mauritius and ArcelorMittal had earlier been disqualified by the committee of creditors as the resolution professional for Essar Steel had found them ineligible under Section 29(A) of the Insolvency and Bankruptcy Code. Rewant Ruia, son of Essar Group co-founder Ravi Ruia, had a 25 percent stake in Numetal Mauritius, while ArcelorMittal was classified as a promoter for other insolvent companies when it had submitted its earlier bid on Feb. 12.
Lenders are not permitted to open the fresh bids till the Ahmedabad bench of the National Company Law Tribunal decides on the eligibility of bids submitted by Numetal and ArcelorMittal in the previous round. Both bidders have challenged the committee of creditors’ decision to disqualify them.
The matter is scheduled to be heard on April 4.
Here are other highlights from Vedanta chairman Anil Agarwal’s interview:
- Whenever we’ve acquired assets, we’ve doubled or tripled capacity and modernised the plants
- Will look to do the same with Essar if we win the bid
- We have only $4 billion of debt; so we can take this deal on
- Essar is one of the finest assets in India
- Steel will become one of the verticals of the Vedanta group if the deals go through
- We will make more investments in Electrosteel Steels and expand
- We’ll accept whatever result the insolvency process throws up