ArcelorMittal-led consortium bids for Essar Steel

A grouping led by the world's biggest steelmaker ArcelorMittal, mining mogul Anil Agarwal-led Vedanta and a consortium of Russia's VTB Capital-backed NuMetal and JSW on Monday  put in bids to takeover bankrupt Essar Steel in the second round of bidding.

In the first round, NuMetal and ArcelorMittal were the only two parties that bid to buyout Essar Steel, but the insolvency resolution professional overseeing the auction was advised to reject both the bids owing to their promoters being linked to defaulter companies. Revised bids were due on Monday.

Sources privy to the development said three groups bid for Essar Steel.

NuMetal, majority-owned by Russia's second largest bank VTB Group, shed Aurora Trust, which has links to Rewant Ruia - son of Essar Steel promoter Ravi Ruia, in the second round of bidding. While its promoters bought out Aurora Trust's 25% stake, NuMetal aligned with JSW to make the revised bid on Monday.

ArcelorMittal, which had been disqualified in the first round for being listed as a promoter of loan defaulter Uttam Galva Steel, bid along with Nippon Steel and Sumitomo Metal Corporation.

This after it got declassified as a promoter of Uttam Galva Steel. The company had sold its entire holding in Uttam Galva Steel before the first round of bids in February but its name had continued as a promoter on the stock exchanges, resulting in its disqualification.

Sources said Vedanta was the surprise entrant on Monday. Vedanta has already won a bid to acquire bankrupt Electrosteel Steels in an insolvency auction.

Confirming bidding for Essar Steel, Anil Agarwal said the company has made a compelling bid. "I have put a very lucrative bid. This is a great opportunity... When we want it, we must have it."

Six firms had initially put in expressions of interest to acquire Essar Steel, whose Rs 51,800 crore of outstanding debt claims have been admitted under the bankruptcy process. These firms included Tata Steel, state-owned SAIL, ArcelorMittal, NuMetal, Vedanta and Singapore-based fund SSG.

Only ArcelorMittal and NuMetal put in bids in the first round on February 12.

Sources said JSW was interested in acquiring Essar Steel after Tata Steel's acquisition of bankrupt Bhushan Steel for Rs 35,200 crore gave it a pole position.

But bankruptcy rules did not permit anyone who had not put in an EoI to bid and so it aligned with NuMetal for bidding today. Rules also bar defaulting promoters from bidding.

TyazhPromExports (TPE) of Russia and Indo International are the other shareholders of NuMetal.

The Ahmedabad bench of the National Company Law Tribunal (NCLT), which has been approached by NuMetal against the disqualification of first bid, on Monday ruled that second round of bids cannot be opened before April 4.