Numetal Mauritius, the consortium put up by Russia’s largest commercial bank VTB Capital, is confident that it will be able to take over Essar Steel despite concerns over the presence of Ruia scion Rewant Ruia in the team. The company has made provisions to ease out Rewant Ruia, if required, to beat the only other contender, ArcelorMittal. It has also roped in SAIL’s former Chairman CS Verma who had charted out the public sector’s JV with ArcelorMittal. Makram Abboud, Vice-Chairman International, VTB Capital, told BusinessLine the company was committed to acquiring Essar Steel. Excerpts:

Is your bid being criticised because of Rewant’s presence?

When we invest in any jurisdiction that is not our own, we have a local partner; that is how Rewant was selected. We had three law firms and senior judges sitting with us when the consortium was finalised. They felt the consortium satisfies the law. However, we will be flexible on this front; other joint venture partners will acquire his stake, if required.

You are willing to be flexible, but lenders will negotiate only with the highest bidder. Is it possible that you could miss out?

They will negotiate only with the highest ‘eligible’ bidder. We have a person (Lakshmi Mittal promoter of ArcelorMittal) who is bidding knowing that he is not eligible even before his bid is prepared. The law is clear in keeping away the promoter of a defaulting company.

He is a promoter of a company (Uttam Galva Steel) which has defaulted. Selling the stake a day before does not absolve him of what they did before. I did not make the law. Actually, we are against this provision. But we have put in a consortium that meets the law whereas he has not. Any price he puts in now is irrelevant. We will be flexible as we want this asset, but we are not here with a blank cheque.

Why do you feel banning defaulting promoters is incorrect?

I said that because I disagree with it, but it is not upon me to agree or disagree.

For an investor, the government has framed a set of policies and we are here to adhere to it. It is not on me to comment on what the government should do.

There is a general perception that VTB is just fronting Ruia’s interest.

Unfortunately, this the age of fake news. Perception is not fact, and the fact is there in writing, which states who is going to invest and who is doing what.

Why pick a shareholder when you know his presence may be questioned?

Your question is definitely relevant and fair. I picked this person because I have three different law firms telling me there is no problem. We selected a person whom we worked with. I am comfortable with him. He is there not because we know him, but we believe he can deliver.

Will you retain the present management since you are confident on Ruias?

No. They will have no say on how we manage this asset. Ruias are one of our many Indian clients. We have done the biggest transaction with them. We are kind of business friends, but we are not married to each other. We know Essar Steel because of Ruias. Nobody can deny this. However, Ruias’ involvement in managing this asset will be very limited. We will put a new management and board. Rewant (Ruia) will have a stake. He has not been involved in any of the Ruias’ business earlier.

We are committed to winning this bid for Essar Steel because we believe that this company has huge potential for growth if it is given the right support.

Did you buy the slurry pipeline in Odisha from Srei Infrastructure to pre-empt ArcelorMittal from buying Essar Steel?

The pipeline deal is an independent transaction. The bankers have obtained a stay against the deal from the High Court. Even in the unlikely event of the other bidder winning Essar Steel, their operations will not be affected by Numetal owning 70 per cent in the slurry pipeline company. Essar Steel has an existing long-term agreement to use the slurry pipes.

What is your turnaround plan for Essar Steel?

The first priority is to complete the half-completed projects which are struck due to want of funds. We plan to ramp up production to the maximum level of 9.7 million tonnes in 6-8 months.

We have to make separate investment in mines. If we do not develop them, they will be taken back. We have to complete the coke oven plant at Hazira and the expansion of the pellet plant. Once these are done, there is scope for brownfield expansion. The capex cannot be revealed as it is part of the overall bid.

How do you plan to manage the risk due to government policy changes?

This is not specific to the steel industry but across the sector. One of our key successes in India is to keep patience. It is important to handle policy changes gently and go around them to find ways.

We cannot, of course, predict the changes, but we can change our strategy. Mostly, the government’s polices are helping the industry.

Steel imports have fallen to 2-3 million tonnes from 20 mt after the anti-dumping duty levy.

No spurious steel can be produced by small rolling mills as the Bureau of India Standard has been made mandatory.

Do you see ArcelorMittal taking you to court if you win or vice-versa?

I think the vice-versa is more relevant. As I said, the law is very simple. It says defaulting promoters cannot participate in the bidding process. And he was a defaulter on two occasions. Yes, he can miraculously win, but we cannot predict miracles. As of now, there is a clear law and we are following it.

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