Multi-national players including Tata Steel, Essar Group, and ArcelorMittal have reportedly submitted bids to acquire debt-laden Essar Steel which is under a insolvency resolution process. Integrated steel producer with an installed capacity of 10 million tonne per annum, the company is undergoing Corporate Insolvency Resolution Process (CIRP) under the provisions of Insolvency and Bankruptcy Code.
An Essar Group spokesperson said, “Essar Group has submitted EoI (Expression of Interest) for Essar Steel. A resolution plan will be submitted to IRP within the scheduled time frame.” When asked about the rationale for bidding, they said IBC allows promoters to bid for their company at the NLCT. The spokesperson added that the entire process is on purely commercial basis and the final selection is done based on the highest bid offered for the NCLT company. “This practice of promoters being permitted to bid in bankruptcy/insolvency cases is prevalent in the US, UK, and many developed and developing countries.”
Meanwhile, a source said, “Essar Group, participating in the bid has submitted EoI for Essar Steel along with a letter of comfort from Russia's VTB capital which is a financial services company. It is the investment arm of the VTB group.” A global financial services provider, the group operates a large international network and the majority shareholder of the VTB Bank is Russia, with 60.9 per cent voting shares.
A Tata Steel spokesperson neither confirmed nor denied the report, saying, “We keel looking at these options, these are all stressed assets in the country. And as a process... we keep looking at these assets.” While ArcelorMittal refrained from making any comments, a Vedanta spokesperson said the company has not shown any expression of interest.
Among the largest single location steel producers, Essar Steel has a 10 MTPA liquid steel capacity. It also has beneficiation and pellet making capacity of 20 MTPA spread across Vizag and Paradeep. The company said it has made gross investment of over Rs 5000 Crore to set up the facilities. Steel Minister Chaudhary Birender Singh, when asked about plans for PSUs acquiring stressed assets of companies in the sector recommended for insolvency, said, “As far as stressed assets are concerned, only a few companies are from the steel sector... One of the PSUs made request to the Finance Ministry in this regard.”
