New management may be headed by Aditya Mittal, President and CFO of ArcelorMittal.
New Delhi: The world’s largest steel company ArcelorMittal hopes to complete the acquisition of the debt-ridden Essar Steel company by the end of this year, following the Supreme Court verdict on its resolution plan.
Essar Steel, which has 10 million tonne (MT) capacity steel manufacturing complex in Hazira, Gujarat, is expected to be handed over to the ArcelorMittal management in a month’s time as when payments to lenders are made, according to sources. The new management may be headed by Aditya Mittal, who is the President and Chief Financial Officer of ArcelorMittal. He is also the CEO of ArcelorMittal Europe.
The company has said that the completion of the transaction is now expected before the end of the year. “After completion, ArcelorMittal will jointly own and operate Essar Steel India Limited (ESIL) in partnership with Nippon Steel Corporation, Japan’s largest steel producer and the third largest steel producer in the world, in-line with the joint venture formation agreement signed by the two companies,” the company has said in a statement.
ArcelorMittal India Private Limited’s (AMIPL) resolution plan for Essar Steel India Limited (ESIL) has been unconditionally approved by the Supreme Court and the approval of AMIPL’s resolution plan is the final procedural step in ESIL’s corporate insolvency process.
The Supreme Court recently paved the way for ArcelorMittal takeover of Essar Steel for Rs 42,000 crore and set aside the 4 July National Company Law Appellate Tribunal (NCLAT) order giving equal status to financial creditors and operational creditors. A court bench clarified that financial creditors enjoy primacy over operational creditors and the adjudicating authority cannot interfere with the decision approved by the committee of creditors.
ArcelorMittal’s bid amount of Rs 42,000 crore emerged successful as it was much higher than the other bidder, Vedanta, and would help the lenders realise about 85% of their total debt exposure of close to Rs 49,000 crore.
According to a steel sector expert, the development is expected to promote competition in the Indian market and result in the introduction of a new category of value-added product segment which till now is either being imported or is available in lesser quantity in the country. The action may also shift to auto grade steel where other steel makers such as Tata Steel and JSW are fighting for market share.