Debt-laden Essar Steel, being run by a National Company Law Tribunal-appointed interim resolution professional (IRP), saw second-quarter output drop 15% to 1.33 million tonnes, from 1.57 million tonnes in the preceding three months.
In a recent presentation to creditors of Essar Steel, the IRP had indicated that the operations of the steelmaker could slide for want of long-term working capital.
As per the IRP, monthly operating profit declined to ₹113 crore in July, from ₹297 crore in April. If long-term funds were not made available, it could fall further.
Competitors such as ArcelorMittal, Tata Steel, SAIL, Posco, Nippon Steel have reportedly shown interest in buying the Essar Group’s steelmaking facilities, which the group is keen to retain for itself.
‘Expression of interest’
“Essar Group has submitted EoI for Essar Steel,” an Essar Group spokesman wrote in an e-mail. “A resolution plan will be submitted to IRP within the scheduled time frame. IBC allows promoters to bid for their company at the NCLT, and there are no limitations. The entire process is on purely commercial basis and the final selection is done based on the highest bid offered for the NCLT company. This practice of promoters being permitted to bid in bankruptcy/insolvency cases is prevalent in the U.S., the U.K. and many developed and developing countries.”
State Bank of India chairman Rajnish Kumar has said that promoters of defaulting companies were within their rights to bid for their businesses which were on the block following insolvency proceedings. However, wilful defaulters or those borrowers who had diverted funds would not find any place in the bidding process, he added.
Separately, Sajjan Jindal, chairman of JSW, tweeted, “Dubious promoters should not be allowed to submit the rehabilitation plan to prevent the misuse of the Insolvency and Bankruptcy Code.”
