The Supreme Court, in its October 4 order, had asked ArcelorMittal and Numetal to clear the dues within two weeks
ArcelorMittal, in a letter to lenders of Essar Steel, has offered to pay Rs 4,554 crore to settle dues of Uttam Galva Steels and KSS Petron.
The offer comes after the Supreme Court, in its October 4 order, had asked ArcelorMittal and Numetal to clear dues to become eligible to bid for Essar Steel. The court had given both companies two weeks to comply.
ArcelorMittal was a significant shareholder in both Uttam Galva and KSS Petron, before it divested its shareholding in them in February.
But its offer has evoked a sharp reaction from the opposing camp. "From the publicly available data, it is clear that the due is over Rs 8,000 crore," said an executive.
ArcelorMittal's mail was in response to a letter from the Committee of Creditors (CoC), consisting of Essar Steel's lenders. Sources say that the banks have also written to Numetal, which has been asked to clear dues of Rs 37,000 crore.
Neither ArcelorMittal, nor Numetal responded to queries.
In its reply to the CoC, ArcelorMittal has calculated the interest payable on the principal loan up to February 7, in the case of Uttam Galva and February 9 in the case of KSS Petron.
The LN Mittal-company had sold its stake in the two companies on these two days.
According to the above formula, says ArcelorMittal, the outstanding dues of Uttam Galva Steels amount to Rs 3,987 crore, while those of KSS Petron amount to Rs 567 crore.
"That is not the right method to calculate dues. The interest should be calculated as of date," said the executive quoted above.
ArcelorMittal had earlier parked Rs 7,000 crore in an account in State Bank of India, "showing its intent" to clear the dues of the two companies.
The dues have to be paid to clear Clause 29A of the Insolvency and Bankrupcty Code, which bars promoters of defaulting companies from bidding for stressed assets.
Apart from ArcelorMittal, the Supreme Court had also asked Numetal to clear dues of Essar Steel.
The troubled steelmaker has dues of Rs 48,000 crore.
Interest calculation
Even as the deadline to pay dues draws closer, a debate has erupted on how the amount should be calculated.
While ArcelorMittal has taken its exit date (from Uttam Galva Steels and KSS Petron) to calculate the interest payable, sources close to Numetal argue it should be calculated on a "as on date" basis.
Legal experts Moneycontrol talked to say that this is a "tricky question." A senior advocate from a leading law firm said: "The interest should be accumulated as on the date of the submission of the second round of bids, which is April 2."
The Supreme Court had asked Essar Steel lenders to consider bids submitted in the second round of the auction.
While ArcelorMittal's offer has evoked countering views, it is unclear how the Rs 37,000-crore bill for Numetal was calculated.
A senior executive from the industry said that Essar Steel's principal debt amounts to Rs 39,600 crore, and along with interest, amounts to Rs 48,000 crore.
