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Posco likely to bid for Rs 37,284-crore debt-ridden Essar Steel

If bidding happens, the deal would benefit Posco in boosting its India plans

Ishita Ayan Dutt & Surajeet Dasgupta  |  Kolkata/ New Delhi 

Photo: Reuters
At present, Posco has a cold rolling and galvanising project in Mangaon, Maharashtra. Photo: Reuters

South Korean steel manufacturer may consider bidding for debt-ridden Steel, currently facing proceedings under the Insolvency and Bankruptcy Code, according to merchant banking sources close to the development.

Steel's debt in 2015-16 financial year stood at Rs 37,284 crore.

When contacted, India Chairman and Managing Director Gee Woong Sung said, "We don't have a formal position on this right now."

If bids for 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, and

was understood to be in discussions with bankers for advice on bidding for stressed assets, primarily and did not respond to an e-mail sent by Business Standard.

is also reported to be looking at Essar Steel, as the latter would give the firm a presence in the West. A 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 — Tata group Chairman N Chandrasekaran had said that the company was open to “everything”.

Sajjan Jindal's has been keen on Bhushan Steel, which would give it a foothold in the East, but the firm’s interest in can not be ruled out.

On a direction by the Reserve Bank of India, banks had taken Essar Steel to the An interim resolution professional has been appointed to oversee the insolvency proceedings. Essar Group Director has said in recent interviews that Essar would submit a resolution plan for the company.

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First Published: Sat, August 26 2017. 00:30 IST
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