Essar Steel bidding: Ruia family-backed Numetal, ArcelorMittal top contenders

Essar Steel bidding: Ruia family-backed Numetal, ArcelorMittal top contenders

The report said Numetal Mauritus was a special objective vehicle backed by a consortium of Russia's VTB Capital and the Ruia family - promoters of Essar Steel.

A source close to the development, however, said that Mittal may have to face a stiff challenge as the Ruia brothers (Shashi and Ravi Ruia) want to be with Essar Steel even though with a minority shareholding.

Questions are being raised about whether Rewant, son of Ravi Ruia, will be considered a related party and the VTB bid will be struck off.

Founded by Shashi and Ravi Ruia, Essar Steel was referred to the National Company Law Tribunal previous year after accumulating almost Rs 50,000 crore in debts.

Both ArcelorMittal India Private Ltd (AMIPL) and Numetal Ltd have deposited Rs 500 crore in the escrow account to convey their interest in Essar Steel.

The insolvency and bankruptcy code (IBC), India's new bankruptcy law created to clear out distressed companies, has set off a contest for more than $26 billion of steel assets, spurring interest from foreign and domestic metals giants.

In its offer, the company also highlights the experience and track record of the group in the successful acquisition and integration of under-performing assets. It will also be hard for any new player to operate the Essar Steel plant at Hazira without access to the pipeline.

ArcelorMittal, the world's biggest steelmaker, has offered a "detailed industrial plan" for Essar Steel aimed at improving its performance and profitability, it said in a statement on Monday after the bidding deadline. With our industry expertise and renowned operating prowess, we believe we are uniquely equipped to implement a successful turnaround which would be beneficial to Essars stakeholders.”. Essar's 10 million tonne steel plant in Hazira, Gujarat-India's largest single-location flat steel plant-will fit neatly into the company's plan to create a sizable footprint in the Rs 3.15 lakh crore Indian steel market. The complex also houses a 30 million tonne per annum (mtpa), all-weather, deep draft, dry bulk port and a 515MW natural gas-operated power plant. Essar Steel has a nameplate crude steel capacity of 9.6 million tonnes/year, but maximum achievable output is now 6.1m t/y due to a bottleneck, according to ArcelorMittal.

Mr Lakshmi Mittal, Chairman and CEO, ArcelorMittal, said "Essar provides a compelling opportunity for ArcelorMittal to enter the high growth Indian steel market". We believe our technical experience and management know-how, gained from many successful acquisitions and integrations, will ensure success for the various steel and pelletizing operations at Essar.”. "After the bids, I believe across the board, stakes would be [cut] to one-fourth due to equity infusion by the new promoters".

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