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It's Mittal versus Ruia in battle for Essar Steel
Tata Steel and Vedanta which had shown interested and also inspected the company's steel plant in Hazira did not submit any bids
Updated : Feb 13, 2018, 06:05 AM IST
 "Lakshmi Mittal")
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Lakshmi Mittal-led ArcelorMittal and Ruias-backed Numetal Mauritius were the only bidders for Essar Steel on the last day of bidding, which came to an end on February 12.
After an initial flurry of investors who were keen to take over the Ruia's steel assets, other bidders, including Tata Steel and Vedanta, pulled out of the bidding process. Both ArcelorMittal India Private Ltd (AMIPL) and Numetal Ltd have deposited Rs 500 crore in the escrow account to convey their interest in Essar Steel. Now the committee of creditors will whet the proposals to identify who will be the highest bidder. Numetal is a joint venture between Russia's VTB Bank and Rewant Ruia, a relative of the current promoters. The banks are expected to announce the highest bidder in a week's time.
Tata Steel and Vedanta which had shown interested and also inspected the company's steel plant in Hazira did not submit any bids.
L N Mittal, chairman of ArcelorMittal, said, "The offer submitted today 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."
Bankers said the plan of Numetal Mauritius to buy majority stake in Orissa Slurry pipeline infrastructure belonging to the Srei Infrastructure may also have titled the scales in favour of the Numetal as this pipeline supplies more than half of the raw material required by Essar Steel's plant in Hazira in Gujarat. The bidders would have anticipated some litigations with the promoters if supplies get choked, they said.
According to the latest changes in the Insolvency and Bankruptcy Code (IBC), owners and associates of companies whose loans have been classified as non-performing for more than a year are barred from bidding once a case of bankruptcy is filed in the National Company Law Tribunal (NCLT), unless they clear their dues. Existing promoters can qualify to bid only if they have cleared their dues.
Essar Steel owed lenders around Rs 45,000 crore, of which Rs 31,671 crore had become non-performing as of March 31, 2016, from a consortium of 22 banks.
