AM/NS India completes Rs 16,500 cr acquisition of Essar group infra assets

The transaction, fully funded by AM/NS India, includes two port assets and a power plant which are now wholly-owned and operated by it

ArcelorMittal Nippon Steel India (AM/NS India) – a joint venture between ArcelorMittal and Nippon Steel – has closed a Rs 16,500-crore ($2.05 billion) deal to acquire Essar group’s port and power assets. With this, Essar has completed its asset monetisation programme, becoming a debt-free group.

“Essar has concluded its asset monetisation programme and completed the debt repayment of $25 billion, effectively making the group debt-free from Indian banks and financial institutions.” said Prashant Ruia, Director, Essar Capital.

The transaction includes two ports and a power plant. It follows an agreement between the two parties to acquire several power and infrastructure assets for approximately Rs 19,000 crore ($2.4 billion).

Acquisitions of the remaining assets included in the agreement – a 515 megawatt (Mw) gas-based power plant at Hazira, 16 million tonnes per annum (MTPA) all-weather, deep draft terminal at Visakhapatnam and the 100 KM Gandhar-Hazira transmission line – were expected to be completed in due course once necessary regulatory approvals are received, AM/NS India said.

Acquisition of the assets would strengthen the strategic integration of the company’s manufacturing and logistics chain. “This transaction marks a major milestone in our ongoing efforts to strengthen AM/NS India’s energy and logistics supply chain,” Dilip Oommen, chief executive officer, ArcelorMittal Nippon Steel India (AM/NS India), said.

“Owning these strategically located assets also supports our decision to proceed with a Rs 60,000-crore capacity expansion plan at Hazira, including the ability for AM/NS India to realise additional synergies from rising throughput at the port assets in both Gujarat and Odisha,” he added.

The Rs 60,000-crore investment would take the capacity at Hazira from 9 million tonne (mt) to 15 mt. The synergy gain from the acquisition of all infrastructure assets is expected to be $250-$300 million per annum for the steelmaker.

In a separate statement, Essar said that it continues to have a significant presence and substantial operating assets in all its core verticals – energy, metals and mining; infrastructure and logistics; technology and retail. The group has revenues of $15 billion and asset under management of $8 billion within and outside India, Essar said.

Rewant Ruia, director, Essar Ports Terminals Limited, said, “In a planned and strategic manner, we have monetised our assets that we built over the last 30 years.”

“We are now reinvesting in our existing operations and in building new assets, both in India and overseas, with more efficient, latest and carbon neutral new-age technologies, which will be sustainable,” he added.