Resolution plan: Bids for Essar Steel set to be scrutinised today

Oil demand in India rose 10.3% in January 2018 the fourth straight monthly gain

Oil demand in India rose 10.3% in January 2018 the fourth straight monthly gain

L.N. Mittal's son Aditya Mittal, group CFO and CEO, ArcelorMittal Europe, said, "As the [Indian] economy grows, its steel intensity will also increase". A source close to ArcelorMittal said having submitted the bid only yesterday (Monday, February 12) the company would like to wait and watch for further developments.

Mining baron Anil Agarwal's Vedanta Ltd and Sajjan Jindal's JSW Steel, who were earlier tipped to be among the contenders for Essar Steel, which is now under corporate insolvency proceedings, have made a decision to not bid for the asset, the people cited above said. One of the largest players in the country, Essar Steel owes Rs 47,500 crore to lenders, but its total debt including to other creditors and suppliers stands at Rs 78,000 crore.

In 2017, ArcelorMittal had revenues of $68.7 billion and crude steel production of 93.1 million metric tonnes, while own iron ore production reached 57.4 million metric tonnes. In the case of Essar Steel, banks have not recalled the loan, which means that Ruias can bid by repaying the interest overdues and penalties.

A number of indebted steelmakers, including Bhushan and Essar Steel, were directed into insolvency proceedings by the Reserve Bank of India last June.

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". "It highlights the extensive experience and track record of the group in the successful acquisition and integration of under-performing assets, which AMIPL believes would be of considerable value to Essar". Through acquisition, the company would also have access to the deep bench of technical expertise and knowledge from across the group, which, claims ArcelorMittal, is unparalleled in the steel industry.

"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", he said.

Essar's financial problems result from a big investment in developing its main plant at Hazira in India's western Gujarat state, which coincided with weak demand, falling prices and gas supply problems.

Yes, the government has amended the Insolvency and Bankruptcy Code (IBC) to prevent promoters of defaulting companies to bid for stressed assets.

Essar Steel is an integrated flat steel producer and has a crude steel capacity of 9.6 million tonnes per annum, although the current maximum achievable crude steel production level is 6.1 million tonnes per annum, due to a bottleneck in the steel making and casting process, it said in a statement.