The world's largest steelmaker, ArcelorMittal, is likely to bid for stressed
assets facing insolvency proceedings.
Among the 12 stressed
accounts referred by the Reserve Bank of India for insolvency proceedings, five are from the steel sector: Bhushan Steel, Essar Steel, Bhushan Power & Steel, Monnet Ispat & Energy, and Electrosteel Steels.
In July, a team from SBI Capital Markets, which is advising lenders on restructuring packages for some of these companies, had visited London to meet the senior management of ArcelorMittal.
The idea was to get ArcelorMittal
to participate when the assets came up for bidding.
Sources indicated that ArcelorMittal
could be interested in Bhushan Steel
or Essar Steel, depending on valuation, and was in discussion with a leading bank to evaluate and advise on the stressed
has a steelmaking capacity of 5.6 million tonnes while Essar Steel
has a capacity of 10 million tonnes. Bhushan Steel's debt in 2015-16 was Rs 44,478 crore and Essar Steel's Rs 37,284 crore.
has been trying to gain a foothold in India for a while now. It signed a memorandum of understanding (MoU) with the Jharkhand government in 2005 for setting up a 12-million-tonne plant in the state. A year later, the company signed another MoU
with the Odisha government for a similar-sized plant in that state. Neither project made much headway.
In 2009, ArcelorMittal
bought a 33.8 per cent stake in Mumbai-based galvanised steelmaker Uttam Galva Steels and a year later signed yet another MoU
with the Karnataka government for a six-million-tonne steel plant, but that too remained a non-starter.
The company is now in talks with public sector Steel Authority of India (SAIL) for an automotive steel manufacturing joint venture.
Discussions have been on for some time, though a breakthrough is expected in the next couple of months.
or Essar Steel
could provide ArcelorMittal
an entry into a growing market. According to the World Steel Association, steel production in India is projected to grow at 6.1 per cent, the highest rate among the top 10 steel-using countries. The estimate for 2018 is 7.1 per cent.
bids for Bhushan Steel
it may be pitted against JSW Steel. Recently, a consortium, including JSW Steel, lost out to another consortium led by ArcelorMittal
for Italian steel plant Ilva.