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ArcelorMittal to increase Essar Steel plant's capacity to 18 million tonnes

The bids for Essar Steel were submitted on February 12 and a decision on eligibility was pending

Ishita Ayan Dutt  |  Kolkata 

ArcelorMittal to increase Essar Steel plant's capacity to 18 million tonnes

will scale up the capacity of to 18 million tonnes (mt), making it a significant player in the growing Indian steel market.

“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 said.

The plan for Essar Steel submitted by 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 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

The comment comes amid a pitched battle for Essar Steel with the VTB-backed Numetal. VTB Capital’s Vice-Chairman recently went on record saying ArcelorMittal’s bid was ineligible even as both 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 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.

ArcelorMittal to increase Essar Steel plant's capacity to 18 million tonnes

The issue with ArcelorMittal, however, is that it had a 29.05 per cent stake in Uttam Galva Steels, which is an NPA. sold its stake in Uttam Galva Steels before submission of its bid for Essar Steel and consequently the co-promotion agreement stood terminated.

Also, 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.

First Published: Thu, March 08 2018. 06:12 IST
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