New Delhi: The battle to take over Essar Steel will enter a new phase on Thursday with the National Company Law Appellate Tribunal (NCLAT) at New Delhi set to begin hearing on a batch of cross-appeals concerning disqualified resolution plans for the debt-ridden steel manufacturer by ArcelorMittal India Private Limited (AMIPL) and Numetal Limited.
AMIPL has maintained before NCLAT that its disqualification under Section 29A of the Insolvency and Bankruptcy Code (IBC) was bad in law. Numetal—backed by Russia’s VTB Capital—has not only challenged its own disqualification but also disputed the permission granted to rival AMIPL to clear bank dues of associate companies to cure its ineligibility.
On 19 April, the National Company Law Tribunal’s (NCLT), Ahmadabad bench, had set aside the first round of bidding for Essar Steel, which has a debt of more than Rs45,000 crore, on the ground that the committee of creditors and the resolution professional did not follow the procedure prescribed under the IBC.
The tribunal, however, gave chances to the two final resolution applicants—AMIPL and Numetal—to cure their ineligibility under Section 29A.
Following NCLT’s direction, ArcelorMittal Netherlands BV reportedly deposited Rs7,000 crore in an escrow account with the State Bank of India to settle the dues of associate companies Uttam Galva Steels Ltd and KSS Petron Pvt Ltd on the condition that it is declared the successful resolution applicant for Essar Steel.
Essar Steel’s mine-to-retail character with an annual capacity of 10 million tonnes per annum provides a perfect opportunity to the Luxembourg-based ArcelorMittal (AMIPL’s holding company) to establish its presence in the Indian steel market.
Mauritius-based Numetal, on the other hand, is indirectly held by Essar promoters, the Ruia family, giving them an opportunity to retain some control over Essar Steel.
Numetal is also in talks to acquire Essar Steel’s strategic pipeline that carries iron slurry to the steel plant, Odisha Slurry Pipeline Infrastructure (OSPIL), by repaying its debt to the lenders.
After the initiation of a corporate insolvency resolution process in August last year at NCLT-Ahmedabad, Essar Steel witnessed applications from four entities, including Tata Steel Ltd and Vedanta Resources.
AMIPL and Numetal had emerged as the final bidders in February this year. However, the two finalists for Essar Steel acquisition were disqualified by the resolution professional under Section 29A of IBC.