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ArcelorMittal and Nippon Steel Corporation combine, which acquired Essar Steel through an insolvency driven process has formed a new joint venture company ArcelorMittal Nippon Steel India and appointed Aditya Mittal, President and CFO, ArcelorMittal as its Chairman.
ArcelorMittal will hold 60 per cent in the new company that will operate the Essar Steel plant while Nippon Steel will own the remaining.
In a bid to retain continuity, ArcelorMittal Nippon Steel India has retained Dilip Oommen as CEO.
Earlier, ending over two-years of wait, ArcelorMittal and Nippon Steel had transferred ₹38,896 crore for the acquisition of once Ruias-owned Essar Steel.
The operational and other creditors will get the remaining ₹3,104 crore of the ₹42,000 crore bid placed by ArcelorMittal to settle Essar Steel loan default of ₹49,000 crore.
Lakshmi Mittal, Chairman and CEO of ArcelorMittal said the acquisition of Essar Steel is an important strategic step for ArcelorMittal as it had identified India as an attractive market.
The company was looking at suitable opportunities to build a meaningful production presence in India for over a decade and both India and Essar’s appeal are enduring, he said.
The transaction demonstrates how India benefits from the Insolvency and Bankruptcy Code, a genuinely progressive reform whose positive impact will be felt widely across the Indian economy, he added.
‘To establish big presence in India’
Eiji Hashimoto, Representative Director and President of Nippon Steel said the new company will tap India’s potential by providing it with their respective business experience and advanced technologies, so as to promptly implement the resolution plan and realise its further business expansion.
“For years Nippon Steel has been making direct investments in Brazil, the United States, China and ASEAN countries and we will strive to establish a prominent presence in India," he added.
Aditya Mittal, President and CFO, ArcelorMittal said Essar Steel has quality facilities that provide immediate and substantial production capacity with opportunity for further growth.
“We have in place a targeted capital expenditure plan designed to build on our combined management strength and operational expertise," he said.
The company plans to increase finished steel shipments to 8.5 mt over the medium-term and then to about 15 mt. This will be achieved by initially completing ongoing capital expenditure projects and simultaneously improving product quality and grades to realise better margins.
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