The race for Essar Steel is set for a fresh twist with Sajjan Jindal-led JSW Steel indicating that it may throw its hat in the ring as an individual bidder.
This comes even as reports suggest that the existing bidders – ArcelorMittal and NuMetal – are not unduly worried by the Supreme Court’s judgment asking them to clear all dues of Indian lenders within two weeks to become eligible for the bid. NuMetal is backed by VTB Group of Russia, while JSW Steel is a member of the Numetal consortium.
JSW Steel, it is gleaned from informed sources, is interested in putting its own bid for Essar Steel in case the NuMetal consortium fails to secure eligibility or its bid is not accepted by the Committee of Creditors (CoC).
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Standalone basis
If CoC calls a fresh a round of bids, JSW Steel will participate independently as it is always eligible for any asset on a standalone basis, said a source in the know of the development. “Given that JSW has not got any big asset under IBC like Tatas, its bid for Essar Steel makes sense,” said Paras Bothra, president, Equities, Ashika Stock Broking. However, a JSW spokesperson declined to offer any comments on the company’s interest in bidding for Essar Steel. ArcelorMittal is willing to settle its dues of ₹7,000 crore towards defaults by Uttam Galva and KSS Petron.
NuMetal believes that if it settles the entire dues of ₹49,000 crore of Essar Steel, the company should belong to it and there should be no question of any further bids. It is likely to seek a clarification from the apex court in this regard.
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VTB Group, which backs Numetal, maintains its intention to invest in the Indian steel company Essar Steel.
ArcelorMittal may have to pay ₹12,000 crore on defaults of Uttam Galva and KSS Petron, including interest. Another ₹5,000 crore is to be paid for defaults of Gonterman Pipes, Ispat Profile and Arcelor Mittal Dhamma Processing Pvt. Ltd.
An e-mail sent to ArcelorMittal on the issue failed to elicit a reply till the time of going to press. A source close to the firm said the Supreme Court ruling clearly dismissed the attempts of NuMetal to convince the court that ArcelorMittal was liable for the dues of firms associated with Mr. Mittal’s brother.
ArcelorMittal may not go ahead with Essar Steel if it is forced to pay an additional ₹17,000 crore for NPAs in India as it had already committed to pay ₹42,000 crore for Essar Steel. This will work out to a total payout of ₹59,000 crore.
In that case, the CoC has to go with Vedanta’s bid, which is much lower at just ₹34,000 crore, and look for a third round of bids.