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As the battle for the stressed assets of Essar Steel gets fiercer, ArcelorMittal is now claiming that JSW Steel’s bid could come in for scrutiny from the Competition Commission of India.
“If JSW Steel wins the bid for Essar Steel, it will have 41 per cent of the flat-rolled coil market in India, and the top three players — JSW Steel, Tata Steel and SAIL — will command 90 per cent of the flat-rolled business. This kind of concentration is not really in the best interest of the country, and the competition authority would naturally look at it,” Brian Aranha, Executive President, ArcelorMittal, told BusinessLine .
JSW has bid for Essar Steel by joining hands with Russia’s VTB Bank-promoted Numetal. Aranha said that JSW would take charge of Essar Steel as the operator, as the bank (VTB) is not likely to run the steel plant.
A senior JSW Steel official declined to respond beyond saying ArcelorMittal’s allegations were “baseless and unfounded”.
JSW Steel has a production capacity of 18 mtpa (million tonnes per annum), which is around 14 per cent of the total steel produced in India. Even if Numetal wins the bid for Essar Steel, JSW’s production will reach about 28 mtpa, which will still be just over 20 per cent. JSW plans to add 5 mtpa to its Dolvi unit in Maharashtra.
Tata Steel, which is leading the race to acquire the 5.6 mtpa capacity of Bhushan Steel, has 13 mtpa capacity and plans to increase this to 18 mtpa. SAIL is raising its capacity to 21 mtpa from 17 mtpa.
A steel industry expert said globally, a monopoly is defined as a single company having over 50 per cent market share. When ArcelorMittal acquired Ilva in Italy, he said its market share in cold-rolled steel there increased to 83 per cent. Yet, steel prices did not change much either in Europe or Italy, he said. Aranha is confident that the exit from the debt-laden Uttam Galva will not be a hindrance to the bid for Essar Steel. There are allegations that ArcelorMittal’s exit from the debt-laden company violated an agreement with State Bank of India
“Our bid was made ineligible by the Resolution Professional because we were not declassified as a promoter of Uttam Galva when we placed the bid. So, all other issues being raised by rivals are irrelevant,” he said.
Asked why Nippon Steel & Sumitomo Metal decided to join hands with ArcelorMittal after independently placing an expression of interest for Essar Steel, Hideki Ogawa, Managing Director, said it was part of its global expansion strategy and the company had a good relationship with ArcelorMittal.
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