WILL BE SUR­PRISED IF ARCELORMIT­TAL IS IN­EL­I­GI­BLE FOR ES­SAR STEEL BID: LN MIT­TAL

Business Sphere - - IN THE NEWS -

Steel ty­coon L N Mit­tal has said he would be sur­prised if ArcelorMit­tal, the world's largest steel­maker, is de­clared in­el­i­gi­ble to par­tic­i­pate in the bid for Es­sar Steel. ArcelorMit­tal and Numetal are the two bid­ders in the race to ac­quire debt-laden Es­sar Steel, cur­rently un­der­go­ing in­sol­vency pro­ceed­ings as it owes more than Rs 45,000 crore to over 30 banks. "Ul­ti­mately, I would be sur­prised if we are not el­i­gi­ble to par­tic­i­pate in the bid for Es­sar Steel. ArcelorMIt­tal is the world's lead­ing steel com­pany – we are fi­nan­cially strong, we are ready to in­vest and bring our tech­nol­ogy and prod­ucts and pro­cesses to In­dia," Lak­shmi N Mit­tal, Chair­man and CEO, ArcelorMit­tal has told PTI Eco­nomic Ser­vice. The Com­mit­tee of Cred­i­tors (CoC) on May 2 had met rep­re­sen­ta­tives of ArcelorMit­tal and Numetal re­gard­ing their el­i­gi­bil­ity for Es­sar Steel and a de­ci­sion is awaited. Mit­tal, who has been try­ing to get a foothold in In­dia for over a decade, has said: "In­dia is im­por­tant to us. Of course for me per­son­ally I would like us to have a pres­ence in my home coun­try". But more­over, he said, "In­dia is a strate­gic growth mar­ket and if you look at steel in­dus­try growth then the ma­jor­ity of growth in the com­ing years is go­ing to come from the de­vel­op­ing economies ex China and that in­cludes In­dia". He said un­der present cir­cum­stances there is a strong strate­gic ra­tio­nale for the com­pany to es­tab­lish a pres­ence in In­dia. Asked whether they would be open to or­ganic, in­or­ganic growth in In­dia, Mit­tal in an e-mailed in­ter­view said: "At the mo­ment we are fo­cussed on Es­sar".

ArcelorMit­tal last week had said "a swift de­ci­sion" on the case will be in the best in­ter­est of all stake­hold­ers. Un­able to regis­ter its pres­ence in In­dia for more than a decade, ArcelorMit­tal is eye­ing en­try in the In­dian steel mar­ket, which it be­lieves has high growth po­ten­tial, through Es­sar ac­qui­si­tion. It has said ArcelorMit­tal would be the most cred­i­ble owner of Es­sar Steel and the com­pany viewed the ac­qui­si­tion as a com­pelling op­por­tu­nity for it to en­ter the In­dian steel mar­ket. The com­pany has plans to in­crease Es­sar's out­put in long term to 15-20 mil­lion tonne per an­num (MTPA) from the cur­rent 6 MTPA. The steel firm also said if its bid is suc­cess­ful it would help In­dia bridge its sup­ply-de­mand gap and make a sig­nif­i­cant con­tri­bu­tion to the Make-in-In­dia ini­tia­tive. ArcelorMit­tal had bid for Es­sar Steel on Fe­bru­ary 12. The com­pany has been try­ing for long to en­ter In­dia but has not suc­ceeded so far. Over a decade back, it had an­nounced to set up two plants - 12 MTPA each- in Jhark­hand and Odisha. ArcelorMit­tal has pres­ence in 60 coun­tries and an in­dus­trial foot­print in 18 coun­tries. It is a lead­ing sup­plier of steel in ma­jor global mar­kets. In 2017, ArcelorMit­tal had rev­enues of USD 68.7 bil­lion and crude steel pro­duc­tion of 93.1 MT, while its own iron ore pro­duc­tion reached 57.4 MT. It is listed on stock ex­changes of New York, Am­s­ter­dam, Paris, Lux­em­bourg and Spain. Mean­while Es­sar Steel lenders have moved the Na­tional Com­pany Law Ap­pel­late Tri­bunal seek­ing an early hear­ing of ap­peals filed by suit­ors for the in­sol­vency-bound firm, say­ing they are los­ing a lot of money be­cause of the de­lays. The NCLAT had on May 22 or­dered sta­tus quo on in­sol­vency of Es­sar Steel for two months as it ad­mit­ted pe­ti­tions of NuMetal and ArcelorMit­tal over the bid­ding el­i­gi­bil­ity. State Bank of In­dia (SBI) had filed the pe­ti­tion in the NCLAT on be­half of the Com­mit­tee of Cred­i­tors (CoC) of Es­sar Steel seek­ing the "ear­li­est pos­si­ble date for hear­ing on a day to day ba­sis." The NCLAT had on May 22 or­dered hear­ing on the ap­peals on a daily ba­sis from July 23-26. SBI has said the cor­po­rate in­sol­vency res­o­lu­tion process of Es­sar Steel com­menced on Au­gust 2 and since then the op­er­a­tions of the com­pany are be­ing sus­tained and largely funded by the CoC. On top of the Rs 52,569 crore ad­mit­ted out­stand­ing debt, an in­ter­est of Rs 5,100 crore has ac­crued on the loans and ad­vances since the in­sol­vency com­mence­ment date, it has said. Rus­sia's VTB Cap­i­tal-based NuMetal and ArcelorMit­tal are vy­ing for Es­sar Steel, which op­er­ates a 10 mil­lion tonnes a year steel plant with about 11,000 em­ploy­ees. NuMetal and ArcelorMit­tal have filed pe­ti­tions in the NCLAT chal­leng­ing the dis­qual­i­fi­ca­tion of their first round of bids. Both NuMetal and ArcelorMit­tal put in the sec­ond round of bids af­ter the first bids were opined to be invalid -- NuMetal be­cause of it be­ing 25 per cent owned by Aurora Trust of Ruia fam­ily, the pro­mot­ers of Es­sar Steel; and ArcelorMit­tal be­cause of it hold­ing shares in loan de­fault­ing com­pa­nies Ut­tam Galva Steel and KSS Petron. The in­sol­vency and bankruptcy law bars par­tic­i­pa­tion by pro­mot­ers of delin­quent com­pa­nies in bid­ding for as­sets be­ing auc­tioned. For the sec­ond round of bid, VTB Bank sought to sever ties with the Ruia fam­ily by buy­ing out Aurora Trust's stake in NuMetal. ArcelorMit­tal trans­ferred Rs 7,000 crore to an es­crow ac­count of SBI to clear out­stand­ing loans of Ut­tam Galva and KSS Petron.

Lak­shmi N Mit­tal, Chair­man and CEO, ArcelorMit­tal

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