Numetal, Arcelor enter last lap in Essar Steel bid

MUMBAI/KOLKATA: The race to buy bankrupt Essar Steel has boiled down to just two bidders: billionaire Lakshmi Mittal who built his steel empire by buying up bankrupt companies across the globe, and Numetal Mauritius, a joint venture between Russia’s VTB Bank and Rewant Ruia, a member of the Essar group’s promoter family.

Mittal expressed optimism about the Indian steel industry and said his company, ArcelorMittal, has submitted a detailed plan that would address many of the operational issues that dragged Essar Steel into bankruptcy.

The offer submitted on Monday by ArcelorMittal India Pvt Ltd (AMIPL) includes a detailed investment plan to address the operational issues in Essar’s existing asset base, Mittal said in a statement. “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.”

Other contenders like Tata Steel and mining magnate Anil Agarwal of Vedanta Resources pulled out of the bidding process, after the assets of Essar Steel looked unattractive following an ownership change in a company that is key to Essar Steel’s raw material supply, said two people with knowledge of the matter.

Numetal had recently bought a 70 per cent stake in Orissa Slurry Pipeline India that owns a 253-km slurry pipeline which moves half of Essar Steel’s iron ore. In the absence of the pipeline, it would cost Essar Steel an additional Rs 1,300-2,000 crore a year to transport some 10 million tonne of raw material to its plant. It will also be difficult for any new player to operate the Essar Steel plant at Hazira without access to the pipeline.

A Vedanta executive said the company was not keen on a bid, while a Tata Steel spokesperson said, “We do not have anything to comment.” A JSW Steel spokesperson said the company did not bid for Essar Steel.

Both AMIPL and Numetal have deposited Rs 500 crore each in an escrow account to convey their interest in Essar Steel.

“Essar provides a compelling opportunity for ArcelorMittal to enter the high-growth Indian steel market,” the company statement said.

Details of the bids from Numetal and ArcelorMittal are not known immediately.

Lenders led by State Bank of India are looking to recover Rs 49,000 crore from Essar Steel.

Mittal said Essar benefited immensely from its global expertise.

“Essar would also have access to the deep bench of technical expertise and knowledge from across the group which is unparalleled in the steel industry,” said Mittal.