In its April 19 order, the Ahmedabad bench of the NCLT had asked Essar Steel’s CoC and resolution professional (RP) to reconsider the first set of bids received from Numetal and ArcelorMittal, granting an additional 30 days for the resolution process.
The committee of creditors (CoC) of Essar Steel, which met on Friday for the second time since the National Company Law Tribunal’s (NCLT) order on April 19, will ask ArcelorMittal and Numetal to “cure” their bids as per the NCLT’s order, bankers told FE.
“Today’s meeting was a procedural one,” one of the large lenders to Essar Steel who attended the meeting said, on condition of anonymity. “We will do what the NCLT has directed us to do. And we will wait for the hearing at the NCLAT (National Company Law Appellate Tribunal) on May 17.”
In its April 19 order, the Ahmedabad bench of the NCLT had asked Essar Steel’s CoC and resolution professional (RP) to reconsider the first set of bids received from Numetal and ArcelorMittal, granting an additional 30 days for the resolution process. It had suggested that the two bidders be allowed an opportunity to rectify their bids to make them eligible.
The NCLT had also observed that inviting a second round of bids without offering bidders an opportunity to rectify their bids was “prima facie invalid”.
The second round of bidding took place after the CoC disqualified the first set of bids received from ArcelorMittal and Numetal.
Since then, both ArcelorMittal and Numetal have moved the NCLAT. While ArcelorMittal has challenged the disqualification of its bids by the RP and the CoC, Numetal has challenged the NCLT’s order. The NCLAT said it would hear both the appeals on May 17. It has issued notices to the RP and the CoC on the matter.
Bankers are still divided in their opinion on this matter. Some of the lenders are in favour of inviting a fresh round of bid from all interested parties. JSW Steel and Vedanta are interested in Essar Steel. While Vedanta had bid for the beleaguered steelmaker in the second round, JSW could not submit a bid since it had not submitted an expression of interest in the first round. But it had joined hands with Numetal to bid for Essar Steel.
Sources close to Vedanta said that although the NCLT did not allow the second round of bids to be opened, it is still interested in acquiring Essar Steel and would bid for the asset given an opportunity. Sources close to the development are not ruling out another round of bidding, although a lot would depend on the NCLAT ruling.
The RP and the CoC had disqualified ArcelorMittal’s bid since it was considered a promoter of Uttam Galva Steels and KSS Petron, both loan defaulters. Numetal’s bid was held to be ineligible since one of the persons associated with the company, Rewant Ruia, is related to the promoters of Essar Steel. The shareholders of Numetal include Russia’s VTB Bank and engineering firm Tyazhpromexport, financial investor Aurora Enterprises (in which Ruia has an interest) and commodity trading company Indo International Trading.
Essar Steel’s RP is Satish Kumar Gupta. The lenders to Essar Steel include State Bank of India, Canara Bank, Punjab National Bank, IDBI Bank and ICICI Bank. The company, which has a steel-making capacity of 9.7 million tonnes per annum, owes close to Rs 50,000 crore to lenders.