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“It is now operating at 5 mt and can be ramped up to 8.5 mt. The aspiration is to take the capacity to 18 mt,” sources in ArcelorMittal said.
The plan for Essar Steel submitted by ArcelorMittal is likely to have laid out the road map for the company. All the ongoing projects will also be completed.
Essar Steel was the company’s Plan A and Plan B right now, indicated sources, as it provided ArcelorMittal the perfect opportunity to enter the Indian market.
Among the Reserve Bank of India’s first list of non-performing assets (NPAs), Essar Steel is the largest steel company with a nameplate capacity of 9.7 mt. It will also be the largest debt resolution for banks as it owes them around Rs 440 billion.
ArcelorMittal’s India journey has been fraught with obstacles. The company has been trying to set up greenfield plants in India for the last decade and more. It had signed memorandums of understanding with the Jharkhand, Odisha and Karnataka governments. However, none of the steel plants came up due to various issues, the primary being problems over land acquisition.
“People started creating issues. Whether others were supporting them, we do not know. Whenever we have tried to enter the Indian market, people have been scared,” said the source in ArcelorMittal.
The comment comes amid a pitched battle for Essar Steel with the VTB-backed Numetal. VTB Capital’s Vice-Chairman Makram Abboud recently went on record saying ArcelorMittal’s bid was ineligible even as both companies were facing an eligibility test.
The bids for Essar Steel were submitted on February 12 and a decision on eligibility was pending.
Sources close to ArcelorMittal said the Insolvency and Bankruptcy Code was designed to prevent defaulting promoters from re-acquiring their assets. “We were not promoters of Essar Steel,” the source said.
The issue with ArcelorMittal, however, is that it had a 29.05 per cent stake in Uttam Galva Steels, which is an NPA. ArcelorMittal sold its stake in Uttam Galva Steels before submission of its bid for Essar Steel and consequently the co-promotion agreement stood terminated.
Also, ArcelorMittal has maintained that it never had board representation or management control in Uttam Galva Steels. “Key positions were held by the Miglani family,” said the source.
For Numetal, the issue is an offshore trust holds a 25 per cent stake in which Rewant Ruia, son of Ravi Ruia, co-founder of Essar Steel, is the trustee.
ArcelorMittal, however, was invited by the government to participate in the bidding for stressed assets in India.