The takeover battle between Lakshmi Mittal of ArcelorMittal and the Ruia family of the Essar Group has intensified. After Essar Steel, ArcelorMittal has opened another flank and expressed interest in acquiring the group’s EPC Constructions India from ongoing insolvency proceedings, said people with knowledge of the matter.
ArcelorMittal, the world’s biggest steelmaker, picked up expression-of-interest documents last week. The other potential suitors for EPC Constructions are New Delhi based Alchemist ARC and Mauritius-based Royale Partners Investment Fund (RPIF), the people said. “ArcelorMittal is keen to expand Essar Steel’s capacity to 20 million tonnes. EPC Constructions has been involved in building the Hazira facility along with other associated infrastructure, so it can offer additional synergies,” said an official.
The resolution professional of EPC Constructions is expected to invite proposals at the end of September, after which financial bids are to be submitted, the people said. An ArcelorMittal spokesperson declined to comment.
Abhijit Guha Thakurta, the company’s resolution professional, did not respond to ET’s queries till press time. EPC Constructions, formerly known as Essar Projects (India) Ltd., is the second company of the once-thriving steel to-BPO conglomerate that’s been referred to bankruptcy court, after Essar Steel. The Mumbai bench of the National Company Law Tribunal directed the initiation of insolvency proceedings in May on a petition by IDBI BankNSE -1.29 %, which sought to recover Rs 969 crore from the company.
The company is into the engineering, procurement and construction (EPC) business and has built all the steelworks, refineries and ports for the Essar Group. It has outstanding debt of Rs 6,000 crore, of which Rs 4,000 crore is the principal amount.
As per the company, it clocked revenue of Rs 2,000 crore in FY17 while its FY18 order book stood at almost Rs 8,000 crore. Although largely a captive set-up, the company also took on third-party contracts.
Alchemist ARC and RPIF have been pursuing distressed assets in India. Alchemist ARC is sponsored by Alok Dhir, managing partner of law firm Dhir & Dhir Associates.
The ARC has former State Bank of India chairman Pratip Chaudhuri as its chairman. RPIF hit the Indian headlines last year after it proposed to invest $1.67 billion in the Sahara group’s Aamby Valley project.
Mails to Alchemist and RPIF did not generate a response as of press time.
Interest from potential bidders comes as employees of EPC Constructions protested at the previous meeting of the committee of creditors over unpaid salaries and dues. Some senior management executives resigned after what they claimed was the high-handed behaviour of the resolution professional. Lenders including ICICI BankNSE -0.57 %, Axis BankNSE -0.50 %, Yes Bank, Dena Bank and Central Bank of India are said to have asked for a detailed plan to settle the issue.
There has been renewed investor interest in the EPC segment.
With the government allocating $92.22 billion for infrastructure in the Union Budget, domestic and international investors are once again betting on the construction industry that was hit the hardest due to policy paralysis and red tape.
The focus on infrastructure is expected to create huge demand for construction equipment in India. The country needs 55 new airports by 2030 with an investment of $36-45 billion.
Road construction has been a boon for the infrastructure industry, with private companies taking on projects through the public-private partnership model.
India needs investments worth Rs 50 trillion ($778 billion) in infrastructure by 2022 to achieve sustainable development.
