South Korean steel manufacturer Posco may consider bidding for debt-ridden Essar Steel, currently facing proceedings under the Insolvency and Bankruptcy Code, according to merchant banking sources close to the development.
Essar Steel's debt in 2015-16 financial year stood at Rs 37,284 crore.
When contacted, Posco India Chairman and Managing Director Gee Woong Sung said, "We don't have a formal position on this right now."
If Posco bids for Essar Steel, the deal would benefit Posco in boosting its India plans. Posco came to India with plans for a mega steel plant, but the plans took a bit hit.
It had signed a deal with the Odisha government in 2005 for a 12-million-tonne steel plant. But protests over land acquisition and change in mining policies put the project on the backburner.
At present, Posco has a cold rolling and galvanising project in Mangaon, Maharashtra, with a capacity of 0.45 million tonne for coated steel and 1.8 million tonnes for cold rolled steel. The unit supplies products to automotive customers.
Other bidders for Essar Steel, which has a capacity of 10 million tonnes, could be ArcelorMittal, Tata Steel and JSW Steel.
ArcelorMittal was understood to be in discussions with bankers for advice on bidding for stressed assets, primarily Essar Steel and Bhushan Steel. ArcelorMittal did not respond to an e-mail sent by Business Standard.
Tata Steel is also reported to be looking at Essar Steel, as the latter would give the firm a presence in the West. A Tata Steel spokesperson said, "Tata Steel evaluates various strategic opportunities on an ongoing basis. The company would not like to comment on market speculation."
At the recent Tata Steel annual general meeting — while responding to shareholder queries on whether the firm would consider buying stressed steel assets, including Essar Steel — Tata group Chairman N Chandrasekaran had said that the company was open to “everything”.
Sajjan Jindal's JSW Steel has been keen on Bhushan Steel, which would give it a foothold in the East, but the firm’s interest in Essar Steel can not be ruled out.
On a direction by the Reserve Bank of India, banks had taken Essar Steel to the National Company Law Tribunal. An interim resolution professional has been appointed to oversee the insolvency proceedings. Essar Group Director Prashant Ruia has said in recent interviews that Essar would submit a resolution plan for the company.