The Bargain Hunters
On 17 November, a 27 member team from London based ArcelorMittal drove into Essar Steel's 10 million tonne (MT) steel manufacturing complex at Hazira in Gujarat. The team, led by Aditya Mittal, 41, son of steel baron Lakshmi Mittal and CFO of the world's largest steelmaker, had come for a first round of due diligence. Mittal asked for safety gear yellow hard hats and steel toe leather boots to walk through the plant.
Mittal, who looks much younger than his years, took a close look at how steel was being made and discussed processes that Essar follows. It was a first step towards identifying and verifying records and processes at Essar Steel.
For Essar Steel employees, Mittal and team were just one group of visitors to question them and check out the plant. Around the time of the ArcelorMittal visit, the Hazira complex hosted teams from Tata Steel and Japan's Nippon Steel. The Nippon team came with due diligence experts and M&A specialists.
The race to acquire assets of the 12 big defaulters referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC) by their lenders, after being nudged by the Reserve Bank of India, or RBI, is gathering pace. It is raising hopes that banks which have lent money to these companies will not have to completely write off their investments and that at least a part of India's depressing `8 lakh crore non performing assets, or NPA, story will be redeemed.
Of the 12 large defaulters identified by the RBI for insolvency proceedings, at least 10 have been able to draw the attention of buyers, including international players and global investment funds.
ArcelorMittal is hoping to pick up one of the big steel companies Essar Steel or Bhushan Steel. Also in the fray are Korean giant POSCO and Indian steelmaker JSW Steel. In the case of Essar Steel, a resolution plan from the promoter Ruia family was also in the works but got halted after the government restrained promoters whose loans have been classified as NPAs from bidding for at least one year. As we go to press, news is trickling in that Essar and Bhushan promoters are in talks to pay their dues to be able to bid but it is uncertain whether the government will allow that. The
