Vedanta unlikely to participate for second round of bidding for Essar Steel

SBI-led consortium of creditors have rejected the bids submitted by ArcelorMittal and Numetal finding them ineligible under IBC laws

Metals and mining giant Vedanta Ltd is unlikely to participate in the second round of bidding for debt-laden Essar Steel, according to a source.

Vedanta had submitted an Expression of Interest (EoI) for Essar Steel but did not bid for the bankrupt steelmaker which owes over Rs 450 billion to its lenders.

The bids closed on February 12, 2018, with only ArcelorMittal and Numetal submitting resolution plans for the troubled Essar Steel.

There is a second chance for companies who had submitted EoIs as the SBI-led consortium of creditors this week rejected the bids submitted by ArcelorMittal and Numetal finding them ineligible under the IBC (Insolvency Bankruptcy Code) laws that debar related parties from bidding.

The CoC has, however, voted to allow a second round of bidding for the Essar Steel's nearly crippled 10-million tonne-asset at Hazira in Gujarat. The lenders have set April 2 as the deadline for the second round.

"Vedanta is focussed on Electrosteel Steels. Had it been keen for Essar Steel, it would have submitted bid in the first round only," a source in the know of the matter said.

When contacted, a company spokesperson refused to comment on the matter.

Electrosteel Steel is another steel producer which is undergoing insolvency proceedings and has a loan exposure of over Rs 110 billion.

Numetal and ArcelorMittal were the only two bidders for Essar Steel.

These companies had put in their bids but have been battling each other amidst questions about their very eligibility to bid.

Even though the Luxembourg-based ArcelorMittal has teamed up with Nippon Steel & Sumitomo Metal Corp to bid for Essar Steel, it has been found ineligible for its joint venture with Uttam Galva, which is at the NCLT awaiting resolution.

As for Numetal's bid, one of the promoters of the special purpose vehicle SPV is Rewant Ruia, the son of an Essar Group promoter Ravi Ruia, one of the original promoters of Essar Steel.

Bankers, however, have said that if these companies delink their connections from the promoters or standardise their loans they can bid again in the second round.

Tata Steel and state-run SAIL had also submitted EoIs for Essar Steel earlier.