Numetal, a Special Purpose Vehicle floated last year by a clutch of investors including VTB Bank of Russia, has presented a case against any disqualification of its bid by the appointed Insolvency Resolution Professional (IRP). It had,a source disclosed, contended to the IRP that its resolution plan was "within the ambit of law" and based on legal advice.
The committee of creditors is led by State Bank of India. It was likely to meet on the coming Monday to decide on the winning bid for Essar Steel. The IRP has taken legal advice from Mumbai-based legal entity Cyril Amarchand Mangaldas; a final view is yet to be taken.
Essar Steel was referred to the National Company Law Tribunal last year, under the Insolvency and Bankruptcy Code. The latter law, after an amendment in November 2017, bars promoters with shareholding in other companies that have defaulted on loans from bidding in such cases.
ArcelorMittal, largest steel company in the world, was a promoter of Uttam Galva; the latter had featured in the Reserve Bank of India's list of major defaulting companies. ArcelorMittal had, at the time, 29 per cent in Uttam Galva Steels; earlier in February, it+ transferred this to Sainath Trading Company, a co-promoter group company.
The change in law saw Essar Steel's promoters also not bidding for the company, though they had openly conveyed their intentions earlier.
The IRP is believed to have asked Numetal that if ArcelorMittal's bid is to be rejected, why not its, too? Rewant Ruia, son of Ravi Ruia, one of the promoters of the Essar group, holds a beneficiary interest in Aurora Enterprises, a trust which holds 25 per cent in Numetal.
Numetal represented to the IRP that Rewant Ruia is a financial investor with a beneficial minority stake in Numetal, not a promoter; nor will he have control or management rights. He will also not have any role in the management of Essar Steel, it argued. Hence, his beneficial minority interest is of no relevance with regard to the eligibility of Numetal.
Numetal is also believed to have told the IRP its detailed turnaround plan addresses technological, operational and financial issues in both the short and long terms. The company has also pitched it as the largest Foreign Direct Investment (FDI) inflow into India from Russia. Numetal and ArcelorMittal's bids are believed to be in the range of Rs 300 to Rs 350 billion; Essar owes about Rs 440 billion.
It has said VTB Bank has technical and operational capabilities, banking and finance, commodity and regional expertise for creating a sustainable long-term steel business, contributing to the regional and national economy.
Numetal has another shareholder, Tyazhpromexport, an engineering company with over 60 years of construction and operational experience in the steel industry. That includes almost all of the Steel Authority of India's plants and the Vizag Steel one.
Lakshmi Mittal, promoter of ArcelorMittal, had last Friday met Union finance minister Arun Jaitley regarding the question mark on his company's bid. "I think we can create value in Essar Steel with our experience," he said after meeting the minister.