With JSW Steel's tie-up with Numetal after the submission of the resolution plan for Essar Steel, ArcelorMittal says Sajjan Jindal has joined only to keep the consortium out of the country. In an interview with Aditi Divekar, Brian Aranha, executive vice-president, ArcelorMittal, and Hideki Ogawa, managing director, NipponSteel & Sumitomo Metal, talk about why they will win the Essar bid. Edited excerpts:
ArcelorMittal has come out strongly against JSW Steel joining Numetal to bid for Essar Steel assets. It is an open competition. Why have you reacted so strongly?
Brian Aranha: We have no problem with competition. Once we are in India, we will be a very strong company - the ArcelorMittal & Nippon Steel combination. We think that JSW Steel has joined this bid as part of its business strategy to just keep us out. But if they own the asset, it would mean 41 per cent of flat rolled market of India will come to one company. And not just that, 90 per cent of the market share of the north-west region will go to one company alone, which is a lot. This will not benefit consumers. This will result in competition in India lying between top three steel players only.
What if you do not win the Essar Steel assets? Your competitors are also strong and have sizeable presence in Indian market.
Brian Aranha: Why do you think we will not win? Having operational strength in the country today is not the reason why you win the bid. There are two main criteria for winning. First is eligibility and we are confident that we are eligible to bid. The second is the evaluation of the offer according to the scoring process of 70-30 points combination (mentioned by resolution plan). Here, the 70 points are for price and 30 points on industry standing and track record. On the 30 points, there is no stronger consortium than Arcelor-Nippon. We are the world's leading steel company, combining with Japan's leading steel firm. I think it is a powerful combination that will benefit Essar.
There has been so much noise about ArcelorMittal's eligibility for this bid and the noise around Uttam Galva stake. You (Nippon) think, you could have had another partner, which would have made bidding simpler for you?
Brian Aranha: On Uttam Galva, all the noise that has been raised by the competitors is to distract from the fact that we (Arcelor-Nippon) are a much more powerful consortium with far greater steel-making experience. We are pleased to extend our relationship with Nippon with this bid. Both of us were interested in entering India through this asset. So, we have decided to team up rather than become competitors.
Hideki Ogawa: We have a long-standing partnerhip with ArcelorMittal since 1980 and are currently running three different joint ventures. We both have nice experiences to bring in success.
How is your resolution plan a cut above your competitors and how do you perceive India as a market to do business?
Hideki Ogawa: We can bring in many kinds of technology to India. Currently, the country importing several products due to capability constraints of the domestic mills. But once we set up joint venture in India, we can make these products domestically available and also align ourselves with the Make in India vision of the government. Also, referring to environment-friendly technology, India needs clean steel making practices.
Brian Aranha: Whatever the market is, we will work in it. We are present across the globe. The capability of our company is practically working in any environment we land. India does have some challenges like land acquisitions and that is no secret but the government is being very effective at removing obstacles of the past and improving the ease of doing business. I think India is a good place to do business.
Hideki Ogawa: As a Japanese player, there is good friendship between India and Japan and we can revive this friendship and keep great expectations from future growth in India.
ArcelorMittal is being pulled into arguments and this is retarding the entire bidding process. How does the consortium look at this?
Brian Aranha: We do not get tired. We are not going to be deterred. Arcelor-Nippon has a strong resolve. We are not going to get put off by these tactics of the competitors.
Hideki Ogawa: Yes, that is right.