New Delhi, March 18 : In a big blow to the promoters of debt-ridden Essar Steel, the National Company Law Appellate Tribunal (NCLAT) on Monday approved a Rs 42,000 crore takeover bid for the insolvent firm by the world's largest steel maker ArcelorMittal.
A two-member bench, headed by Justice S.J.
Mukhopadhaya, directed ArcelorMittal to deposit the amount with the Committee of Creditors (CoC) to complete the resolution process that has been in the bankruptcy courts for well over 500 days.
The NCLT had approved the resolution plan on March 8 but the matter went to the appellate tribunal, following an appeal filed by Essar's promoters and Standard Chartered.
Ruias had pleaded that their offer of Rs 54,389 crore was superior as it clears 100 per cent outstanding dues of both financial and operational creditors.
Sources said that while the NCLAT decision paves the way for ArcelorMittal to finally proceed and take over the management of Essar Steel, a fresh legal challenge in Supreme Court may be mounted by the Ruia family to retain control of the steel entity.
However, this will only proceed after vetting by a legal team that would take a call whether or not to move the apex court.
An earlier plea in the Supreme Court last year was sent back to the NCLT.
According to a resolution plan proposed by ArcelorMittal, financial creditors will get Rs 41,987 crore out of their total dues of Rs 49,395 crore, while operational creditors would get just Rs 214 crore against the outstanding of Rs 4,976 crore.
While hearing the matter last week, the NCLAT suggested that all operational creditors below Rs 1 crore should get 100 per cent of the dues and so should the employees of Essar Steel.
Only 90 per cent of Rs 42,000 crore should be allowed for financial creditors, it had said.
In its order last week, the NCLT also asked ArcelorMittal to offer 15 per cent of the upfront cash settlement of Rs 42,000 crore, or Rs 6,300 crore, to operational creditors.
The original resolution plan only offered Rs 196 crore to operational creditors against claims of Rs 4,976 crore.
The NCLT order means financial creditors - the banks - will have to take a deeper haircut on the assets.
If ArcelorMittal is finally able to take control of Essar Steel, it would be the first major move of the entity to enter the Indian market where it first tried to set up a steel facility more than a decade ago.
ArcelorMittal's entry would also bring new product category to the steel market with its expertise in producing value added and special steel.
ArcelorMittal has indicated that it will not only turn around the stressed asset of Essar Steel, but will also explore setting up a new steel plant closer to the company's current pellet unit at Paradip in Odisha.
The capacity of steel plant in Gujarat also may be ramped up to full scale of 10 million tonnes (mt) and further to 15 mt.
Essar Steel is among the largest single location steel producers with a 10 million tonnes per annum liquid steel capacity.
The integrated facilities comprise hot rolling facilities, cold rolling facilities, plate mill etc, located in Hazira, on the western coast of Gujarat.
It also has downstream processing and distribution capacity of 4 MTPA.
ESIL also has beneficiation and pellet making capacity of 20 MTPA spread across Vizag and Paradip.
The company employs approximately 4,500 persons directly and more than 30,000 people indirectly.
--IANS
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Source: IANS
