July 06 2020
ArcelorMittal, Numetal in race for Essar Steel
13 February 2018

Vedanta, JSW, Tata Steel keep off; ‘Essar promoter’s son Rewant is minority shareholder in Numetal and can particpate’

Steel baron L.N. Mittal-led ArcelorMittal and Mauritius-based Numetal, backed by Russian VTB Bank and Rewant Ruia as minority shareholder, have submitted bids to buy out distressed Essar Steel, in line with the corporate insolvency resolution process.

Other interested bidders like Vedanta Resources, Tata Steel, JSW Steel did not submit any bids, the deadline for which closed on Monday evening, leaving only ArcelorMittal and Numetal in the race, said sources in the know of the development.

‘VTB backs Numetal’

Confirming the development, a senior official of Numetal told The Hindu, “We have submitted the bids for Essar Steel and are are hopeful of getting it. Numetal is backed by VTB Bank of Russia as the majority shareholder and Rewant Ruia and other professionals from industry as minority shareholders.”

Rewant Ruia is the son of Essar Steel promoter Ravi Ruia. “Numetal bid complied with all the bidding guidelines and having Rewant Ruia as minority partner in the consortium does not make it ineligible,” said another source.

ArcelorMittal has submitted its bids through its subsidiary ArcelorMittal India Pvt. Ltd. (AMIPL) and in its offer, AMIPL has set out a detailed industrial plan for Essar aimed at improving its performance and profitability and ensuring it “can participate in the anticipated growth of steel demand in India.”

Essar Steel was referred to the National Company Law Tribunal (NCLT) last year after accumulating ₹48,000 crore in debt. It is learnt that both bidders have submitted their bids in excess of ₹35,000 crore (mostly in cash) against the liquidation price of ₹20,000 crore set by the independent resolution professional (IRP). “It highlights the extensive experience and track record of the group in the successful acquisition and integration of under-performing assets, which AMIPL believes would be of considerable value to Essar. Essar would also have access to the deep bench of technical expertise and knowledge from across the group which is unparalleled in the steel industry,” said ArcelorMittal in a statement.

‘Can turnaround firm’

Mr. Lakshmi Mittal, chairman and CEO, ArcelorMittal, said, “The offer submitted by AMIPL includes a detailed investment plan to address operational issues in Essar’s existing asset base. 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.”

Essar Steel is an integrated flat steel producer. Its main production facility is in Gujarat. It has a nameplate crude steel capacity of 9.6 million tonnes per annum. The current achievable crude steel production level is 6.1 million tonnes per annum due to a bottleneck in the steelmaking and casting process.

L.N. Mittal’s son Aditya Mittal, group CFO and CEO, ArcelorMittal Europe, said, “As the [Indian] economy grows, its steel intensity will also increase. We believe our technical experience and management know-how, gained from many successful acquisitions and integrations, will ensure success for the various steel and pelletising operations at Essar.”

Investment adviser S.P. Tulsian told The Hindu, “I believe that Ruias will bid aggressively. After the bids, I believe across the board, stakes would be reduced to one-fourth due to equity infusion by the new promoters.”



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