Steel baron Lakshmi Niwas Mittal-led ArcelorMittal and Japanese steel major Nippon Steel & Sumitomo Metal Corporation (NSSMC) have placed a joint bid for debt-laden Essar Steel.
In its resolution plan for Essar Steel, ArcelorMittal’s subsidiary ArcelorMittal India Private Limited (AMIPL)on February 12 outlined the intention to have NSSMC formally join its bid for Essar Steel.
“Should the submitted resolution plan be selected and formally accepted by India’s National Company Law Tribunal, ArcelorMittal and NSSMC would jointly acquire and manage Essar Steel,” ArcelorMittal said in statement on Friday.
“The ArcelorMittal bid is ahead of Numetal’s bid; Rewant Ruia, son of Essar promoter Ravi Ruia is a stakeholder in [Numetal],” a source in the know of the development told The Hindu.
‘20-year history’
Mr. Lakshmi Mittal, chairman and CEO, ArcelorMittal, said, “Partnering with NSSMC for Essar Steel was always our intention and adds further strength to our offer. Combining our experience and expertise creates a powerful partnership that has a proven track record — our rich history of... collaboration dates back more than 20 years with three joint ventures in the U.S.”
“We believe that together, we can contribute our knowledge and technology to support a rapid turnaround in Essar’s performance, enabling it to increase production, enhance its product capabilities and make a meaningful contribution to the future growth of India’s manufacturing sector and the development of its economy,” it added.
“The JV between ArcelorMittal and NSSMC is said to be a partnership of equals,” said another source in the know of the development.
ArcelorMittal and NSSMC have operated I/N Tek and I/N Kote in Indiana, U.S., under joint venture agreements since 1987. I/N Tek and I/N Kote are high-added value downstream steel finishing facilities which serve the automotive and domestic appliance markets.
In its resolution plan, AMIPL set out a detailed industrial and turnaround path aimed at ‘restoring Essar Steel’s fortunes, enabling it to realise its full potential and participate in the anticipated steel demand growth in India’, the company said in the statement.
NSSMC will proceed with ArcelorMittal to form the joint venture and acquire ESIL, subject to the approval of the regulatory authorities, NSSMC said in a statement.
It added that India was one of the most promising steel markets in the world, with significant growth potential in the medium- and long-term and where domestically produced steel products command a superior position.
‘Expanding production’
NSSMC has been steadily expanding local production in India and ‘targeting sectors advantageous to its technological superiority’ it said.
Meanwhile, NSSMC has also been seeking opportunities to engage in integrated steel production in India to capture the growing demand for steel products, which is expected to increase along with the development of domestic infrastructure, the statement added.
ESIL, a major steel firm, has a fully integrated steel production system located on the west coast of India. It manufactures flat steel products, plates and pipes, which are sold through its domestic sales channels, and owns an iron ore mine in the east of India.
“Based on the success of the relationship between NSSMC and AM, as well as AM’s extensive track record of rebuilding many companies and substantial market knowledge of India, NSSMC believes that by bringing together the strengths of both companies, NSSMC and AM will be able to successfully turn around ESIL and transform it into a competitive steel business,” NSSMC added in its statement.
Acquisition of Essar Steel is a part of NSSMC’s 2020 Mid-Term Management Plan that lays out a roadmap to further enhance and develop its global business, the statement said.
