Days after Essar Group concluded the sale of its oil business to Russia’s Rosneft, the Ruia family-controlled conglomerate’s metal business too has attracted suitors, with global majors including Tata Steel and Posco reportedly expressing an interest in buying the assets of the troubled Essar Steel.
Tata Steel has expressed a preliminary interest in Essar Steel and its assets, ET Now reported citing unidentified sources, adding that global strategic firms including Posco may also have expressed a preliminary interest. Tata Steel has reached out to Essar Steel’s IRP (interim resolution professional) Alvarez & Marsal India, which is overseeing Essar Steel’s insolvency under the Insolvency & Bankruptcy Code, ET Now reported.
The National Company Law Tribunal had admitted Essar Steel’s insolvency case earlier this month, after the Gujarat High Court had dismissed the company’s petition against the Reserve Bank of India in the bankruptcy process initiated on the firm. Essar Steel is one of the dirty dozen — the 12 accounts with large unresolved NPAs (non performing assets) which the Reserve Bank of India has identified for speedy action on recovery of dues. Essar Steel owes more than Rs 45,000 crore in unpaid dues to lenders. The banks have already declared Rs 31,671 crore as non-performing as of March 31, 2016. An SBI-led consortium of 22 creditors accounts for 93% of this amount.
Essar Steel, in its petition, had appealed that the RBI notification arrived even while the firm was trying to implement a board-approved restructuring package. It also said that it has repaid almost Rs 3,467 crore in last one year, adding that it employs 4,500 people and that if action was taken under the provisions of sections 7, 16 and 17 of the Insolvency and Bankruptcy Code (IBC), the administration of the company would go into hands of interim resolution professionals (IRP) and it would result in the closing down of the company.
All the financial troubles of the steel major aside, the ET Now report said that Essar Steel’s healthy EBITDA per tonne and its geographical presence is attracting multiple suitors. Earlier this week, Essar Group had concluded a long-delayed sale of Essar Oil to a Rosneft-led consortium for $12.9 billion (about Rs 83,000 crore) in the largest ever foreign direct investment into India, and cut the group level debt by $11 billion.