Bidders seek clarity on ESL Steels' environmental clearance from Vedanta

Vedanta bought the firm under IBC in 2018 and recently put on the block, as it wanted to focus on its core business; bidders' current issue is with plant site in Jharkhand

Potential bidders of ESL Steel (earlier known as Electrosteel Steels) have said they are seeking additional clarity on the environmental clearances from Vedanta group after their initial round of due diligence.

Acquired by Vedanta group in 2018 under the Insolvency and Bankruptcy Code, 2016 for Rs 5,320 crore, ESL Steel was recently put on the block by the group, which wanted to focus on its core businesses.

But a potential bidder said they have raised additional queries on the site of the plant. “There are some pending issues related to environmental clearances of the plant site in Jharkhand and we have sought clarity on these issues,” said a source close to the development. A banker said the response to the sale is lukewarm and the conglomerate would rather wait to get a better valuation after addressing the issues raised by the bidders.

A Vedanta group spokesman declined to comment.

In 2018, several Indian companies, including Tata Steel, Renaissance Steel India Pvt and Edelweiss had bid for the company. But Vedanta, which entered the steel business, acquired the company with its upfront cash offer. Recently, officials of top Indian steel firms visited the plant site for the due diligence, said a banker.

Vedanta, meanwhile, is planning to raise the capacity of the plant from three million tonnes per annum to 15-20 million tonnes. 

“We are about three million tonnes (mt)... We have to take it to world class, which is 15-20 mt of steel. Either we are in that business or we are not in that business,” Anil Agarwal, Chairman of Vedanta group told this paper last week in Odisha. He said if anyone comes up with an offer, the group would evaluate it without giving any timeline for the sale.