ArcelorMittal has joined hands with Japan’s largest steel producer Nippon Steel & Sumitomo Metal Corporation (NSSMC) to take over the stressed asset of Essar Steel. ArcelorMittal India had submitted a Resolution plan for Essar on February 12, which outlined the intention to have Nippon Steel as joint venture partner.
The new joint venture company to be formed would acquire Essar Steel if the financial bid is accepted by lenders and the National Company Law Tribunal (NCLT), said ArcelorMittal in a statement on Friday. Lakshmi Mittal-promoted ArcelorMittal has revealed his joint venture partner for the first time even as doubts are being raised over acceptance of its bid as the Insolvency and Bankruptcy Code bars promoters of defaulting companies from bidding for stressed asset. Though Mittals have sold their stake in its joint venture bankrupt Uttam Galva before bidding for Essar Steel, it will be dragged to Court if it emerges as winning bidder.
The Russian VTB Bank-led consortium Numetal Mauritius is the only other contender for the prized Essar Steel asset which has been put on the block by lenders to recover Rs 45,000 crore defaulted by the company.
Lakshmi Mittal, Chairman, ArcelorMittal, said partnering with Nippon Steel for Essar Steel was always the intention and further adds strength to the offer made. Expertise of both the companies create a partnership of proven track record with three joint ventures in the US over last 20 years, he said. ArcelorMittal and NSSMC have been jointly operating I/N Tek and I/N Kote in Indiana, US since 1987. The two steel units produce value added downstream steel which serves the automotive and domestic appliance markets.
In 2014, ArcelorMittal partnered with NSSMC on the acquisition of AM/NS Calvert, a downstream finishing facility of 5.3 million tonne capacity in Alabama, US. One of the largest newly constructed steel facilities in the US in 40 years had failed to reach its potential.
ArcelorMittal is in the process of infusing fresh funds to enable production of value added steel products. With these investments the capacity utilisation of the plant has improved by over 20 per cent, shipments to automotive sector doubled in last two years and productivity at the hot strip mill has increased by over one million tonnes.