ArcelorMittal is expecting to complete the transaction for Essar Steel before the end of December.
ArcelorMittal India Private Limited’s (AMIPL) resolution plan for Essar Steel India Limited (ESIL) has been unconditionally approved by the Indian Supreme Court, the company announced.
"Supreme Court approval of AMIPL’s resolution plan is the final procedural step in ESIL’s corporate insolvency process. Completion of the transaction is now expected before the end of the year," it said.
After completion, ArcelorMittal will jointly own and operate ESIL in partnership with Nippon Steel Corporation (Nippon Steel), Japan’s largest steel producer and the third largest steel producer in the world, in-line with the joint venture formation agreement signed by the two companies.
Arcelor has a 60:40 joint venture with Nippon Steel. Nippon Steel said in its statement, "AM (ArcelorMittal) and Nippon Steel have agreed that the share capital ratio will be 60 per cent for ArcelorMittal and 40 per cent for Nippon Steel and that both companies will have equal representation and voting rights on its board of directors. The joint venture will be jointly controlled and be accounted for based on the equity method by both companies."
With the Supreme Court approval of AMIPL's resolution plan, the last hurdle in the acquisition of ESIL was cleared. The corporate insolvency process for the company has stretched beyond 835 days.
The acquisition of ESIL would make its owners the fourth largest player in the second biggest market for steel. The Rs 42,000 crore bid gives the steel makers an effective steelmaking capacity of 9.6 million and pellet making capacity of 20 million tonnes.
The pellet capacity is spread over Vishakhapatnam and Paradip. Eight million tonnes is in Vishakhapatnam and 12 in Paradip of which six million tonnes is operational. However, some last mile funding will take it to full capacity.