ArcelorMittal has said the National Company Law Appellate Tribunal (NCLAT) failed to recognise that a financial arrangement will have to be made to pay the dues on account of Uttam Galva Steels and KSS Petron because the Luxembourg-based firm is no longer a shareholder in the two.
The company said this in its application for a stay on the NCLAT’s ruling on September 7, directing ArcelorMittal to clear the dues on account of defaulting firms — Uttam Galva and KSS Petron — by September 11 to be an eligible bidder for Essar Steel.
The NCLAT ruled Numetal's second bid for Essar Steel valid.
The appellate tribunal, in its order, said the stigma of classification of the account as NPA would continue to be levelled against the promoters of Uttam Galva and KSS Petron even after the divestment of shares till the dues were cleared.
Uttam Galva and KSS Petron had been classified as non-performing assets for more than a year, and because of this the NCLAT granted ArcelorMittal a conditional nod to eligibility.
Also, Arcelor was not a shareholder in KSS Petron. KSS Petron is a 100 per cent subsidiary of KSS Global BV, which was acquired by Fraseli, a firm owned and controlled by Mittal Investments.
In order to settle its dues, a scheme would have to be evolved to enable the companies to repay their banks, or for the banks to accept the payment on some basis from Arcelor, the application said. Arcelor had parked Rs 70 billion in an account of SBI towards paying dues on account of Uttam Galva and KSS Petron.
To become eligible to bid for Essar, Arcelor transferred its 29.05 per cent stake in Uttam Galva, in an inter-se transfer, to a promoter group at Rs 1 a share on February 7. Two days later, Fraseli sold shares in KSS Global.
The first round of bids for Essar was submitted on February 12. However, the Ahmedabad Bench of the NCLT did not recognise the sale of shares as a ‘cure’ for ineligibility. It sent the first round to the resolution professional and the committee of creditors for Essar Steel for reconsideration since the bidders — Numetal and Arcelor — had not been given time for ‘curing’ their ineligibility, which meant clearing dues.
After the NCLAT order, ArcelorMittal revised its offer to Rs 420 billion and committed to pay the dues on account of Uttam Galva and KSS Petron as a one-time investment in India.
The offer was in keeping with the tribunal order against which Arcelor moved the Supreme Court the same day.
Arcelor’s application said that its position continued to be that it was in no way obliged to pay the dues and no demand had been raised against it by any financial institution or bank, and so, its offer to pay the amounts (on account of Uttam Galva and KSS Petron) is connected with the success of its resolution proposal.