ArcelorMittal India-linked firm leads race to acquire Indian Steel Corp

Industry:    

An entity linked to ArcelorMittal India is the front runner for Indian Steel Corporation that was admitted for debt resolution by the bankruptcy court after proceedings were initiated by Bain Capital-Piramal Enterprises backed India Resurgence Asset Reconstruction Company, said people aware of the matter.

Naveen Jindal-promoted Jindal Steel & Power is another bidder seeking to buy the steel company, people said.

Lenders to the steelmaker, admitted by the tribunal last October, are hoping to receive at least about 40% of their dues, one of the persons said.

The resolution professional, Ajay Joshi, received four expressions of interest last week of which A M Mining Pvt Ltd, an affiliate of ArcelorMittal India is one of the applicants, people said. Others include Jindal Steel & Power, Metro Global Pvt Ltd and Khandwala Finstock, they said.

The RP declined to comment. JSPL and ArcelorMittal did not respond to a request for comment. Metro Global and Kandwala Finstock could not be reached for comments.

In the last two years, ArcelorMittal India has acquired two steel companies – Essar Steel in December 2019 and Uttam Galva Steel in June 2021 – both under the bankruptcy route. ArcelorMittal partnered with Nippon Steel to acquire Essar Steel for ₹42,000 crore, which amounted to a 77% recovery for lenders. AM Mining offered ₹4,000 crore for Uttam Galva Steel, equating to a 43% recovery.

In a letter to employees last December, ArcelorMittal Nippon Steel’s group chief executive Aditya Mittal stated that the company wants to be at the “forefront of supporting the rapid and sustained rise in steel consumption in India”. Aditya Mittal is the son of ArcelorMittal founder Lakshmi Mittal.

Indian Steel’s verified financial creditors’ claim stood at ₹2,704 crore, according to the disclosure made by the RP. Nearly 70% of the company’s verified debt has been acquired by India Resurgence ARC from various lenders. Currently, Punjab National Bank holds about 20% of the debt.

State Bank of India, the largest lender exited by selling its ₹929 crore debt to India Resurgence ARC for ₹360 crore in 2019, a recovery of 40%.

Indian Steel Corporation was promoted by the promoter of Ruchi Group, the Shahra family, in 2002. Subsequently, Japan’s Mitsui & Company acquired a 20% stake in the company.

Attempts to recast its debt did not progress and by 2018 it defaulted to lenders, the people said. Competition from global players, cyclical downturns and stretched liquidity profile affected the company’s performance, according to a rating report by Icra Ltd.

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