The shotgun marriages being conducted through the insolvency process have not been without controversy or twists. Bhushan Steel Ltd’s resolution is nearing completion, with Tata Steel Ltd emerging as the winning bidder.

But bids for Essar Steel Ltd, another distressed steel major, ran into trouble with the eligibility of both bidders Numetal Mauritius and ArcelorMittal being called into question. A second round of bidding will be conducted, which allows those who submitted an expression of interest in the first round to bid again.

What happens next, will more than two bidders emerge and who is likely to get Essar Steel? There are two parts to this.

One part pertains to the two companies who submitted a first bid: Numetal and ArcelorMittal. They need to rid themselves of the defects that made their bids ineligible. ArcelorMittal may get there soon, as Uttam Galva Steels Ltd announced that ArcelorMittal is no longer in its promoter category.

If this is accepted, then ArcelorMittal will no longer be a promoter of a company that has defaulted on its bank loans. That will put it on the right side of Section 29A of the Insolvency and Bankruptcy Code, which among other things prohibits promoters of any defaulting company from bidding in the resolution process.

In Numetal’s case, it has filed a case in the National Company Law Tribunal (NCLT) to declare itself as an eligible bidder and the suit is scheduled to come up for hearing on 4 April, according to a Mint report. What remains to be seen is if Numetal pursues that route or chooses an alternative one. In its case, Essar Steel’s promoter group owned a stake in Numetal. News reports had indicated that Numetal had offered to correct this, to become eligible. Which route they take, legal or stake sale, is not certain but Numetal can be expected to bid again. That’s two bids in the bag, for sure.

What about the rest? That they did not submit final bids is proof they were not interested, for some reason. There’s Tata Steel Ltd, Nippon Steel & Sumitomo Metal Corp., Vedanta Group and Steel Authority of India Ltd. Still, one must consider the possibility of a rethink.

Last week, it was announced that Tata Steel was successful in its bid for Bhushan Steel Ltd, which itself involves a substantial outlay. If Tata Steel also wins the bid for Bhushan Power & Steel Ltd, whose resolution is currently on hold due to litigation, its appetite will be fully sated. Chances of it re-bidding for Essar Steel appear negligible at this point.

ArcelorMittal had said in early-March that its bid for Essar Steel included Nippon Steel as a joint venture partner. It also said it was always the intention to bid together. One can therefore assume the second bid will also be a combined one, and Nippon Steel will not bid separately.

The Vedanta Group has the financial power to participate in this resolution. But it has also submitted a final bid for Electrosteel Steels Ltd, and in a recent interview to ET Now, seen on, group chief Anil Agrawal said he was not interested in Essar Steel. That rules them also out, for now.

Steel Authority of India Ltd may have reasons to be interested in Essar Steel but its own financial performance has just begun to look up. When other steel majors were reporting good results in FY18 on the back of rising steel prices, Sail was incurring losses in the first half, partly due to higher depreciation and interest costs.

With a debt-to-equity ratio of 1:1.3, Sail has enough on its plate, one would think. It has invested in modernization and capacity expansion, with some way to go before it is completed. If that’s why it decided against submitting a final bid, it was a wise decision and it may decide to stay away in the second round as well.

That then brings us back to ArcelorMittal (with Nippon Steel in tow) and Numetal as the chief contenders, barring any surprise change of mind among the others. Since eligibility will not be in question now, the main concerns will be the financial offer and industry experience.

On the industry experience front, ArcelorMittal at present has an advantage though Numetal also has an option to bring in another steel major as a JV partner. Numetal’s majority shareholder is Russia’s VTB Bank. On the financial front, both companies appear to have the firepower needed for an aggressive bid. With Bhushan Steel gone, this is the last remaining large distressed steel asset on offer. The financial details of the bids are not known, one does not know what the companies had offered. Irrespective of that, Bhushan Steel’s resolution process has set the bar high. One can expect aggressive financial bids, with ArcelorMittal or Numetal set to emerge as the winning bidder.