After more than a year, the long-drawn resolution process of Essar Steel seems to be finally moving towards closure with the Corporate Affairs Ministry ready to order a change in the management of the insolvent steel maker.
The move comes even as a fresh petition was filed before the National Company Law Appellate Tribunal (NCLAT) by Essar Steel MD Prashant Ruia, Essar Group executives, as well as the Standard Chartered Bank, seeking to set aside the ArcelorMittal's winning bid approved by the Ahmedabad bench of the NCLT.
The resolution plan for Essar Steel, which has been facing bankruptcy proceedings since August 2017, was approved by the National Company Law Tribunal (NCLT) last Friday. It accepted ArcelorMittal's Rs 42,000 crore bid for the debt-laden steel maker.
The legal contentions against the takeover can continue later, said the official.
The NCLAT is set to hear the petitions against ArcelorMittal's winning bid on Thursday. The appellate court's order is awaited.
The NCLT's decision paves the way for world's largest steel maker ArcelorMittal's entry into India. The steel company run by steel baron Lakshmi Niwas Mittal has been trying enter the Indian market for more than a decade.
Indian-born Mittal's steel company is the world's largest by volume but, ironically, doesn't have a steel plant to its name in his homeland.
The NCLT bench approved ArcelorMittal's resolution plan, which was voted as the winning bid in October 2018 by the Committee of Creditors (CoC) and which included an upfront payment of Rs 42,000 crore and a post-deal infusion of Rs 8,000 crore in Essar Steel.
The NCLAT had last month directed the NCLT Ahmedabad bench to take a final decision on ArcelorMittal's bid for the acquisition of Essar Steel by March 8, failing which it would pass an order itself.
While the NCLT verdict came as a major setback to the Ruias, who wanted to retain control of the company and had offered Rs 54,389 crore after the CoC approved ArcelorMittal's bid, the promoters of Essar Steel believe they still have a chance.
The Ruias are not yet ready to surrender the 10-million tonne steel mill, which owes Rs 49,000 crore to financial creditors. They have filed an appeal in the NCLAT and if needed, may even approach the Supreme Court. Essar's earlier appeal in these courts had been dismissed.
ArcelorMittal, in a joint venture with Japan's Nippon Steel & Sumitomo Metal Corp., has offered an upfront cash settlement of Rs 42,000 crore to lenders and a Rs 8,000 crore capital infusion.
The world's largest steel maker is also planning a Rs 18,697 crore capital expenditure programme for the asset till 2024, according to its 2018 annual report.
In its order, the NCLT has also ordered ArcelorMittal to offer 15 per cent of the upfront cash settlement of Rs 42,000 crore, or Rs 6,300 crore, to operational creditors.
The original resolution plan only offered Rs 196 crore to operational creditors against claims of Rs 4,976 crore. The NCLT order means financial creditors -- "the banks" -- will have to take a deeper haircut on the asset.