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Essar wants its steel business back, but NCLAT has put a new hurdle

PW Bureau

 After the National Company Law Tribunal’s (NCLT) Ahmedabad bench approved ArcelorMittal’s Rs 42,000-crore bid, Essar Steel threw its hat in the ring earlier this month New Delhi: The National Company Law Appellate Tribunal (NCLAT) has informed Essar Steel Asia Holdings (ESAH) that its resolution plan for debt-laden Essar Steel would only be taken into account if the entity cleared all of Essar Group’s bad dues. This has brought about another roadblock in the lengthy Rs 54,389-crore resolution process. “Think of Rs 80,000 crore more, we will make some room for you, whatever the amount is,” said a two-member bench of the NCLAT, led by Justice SJ Mukhopadhaya on Thursday. “We may consider (the ESAH proposal) if (you pay) whatever — Rs 80,000 or Rs 90,000 (crore) — dues you have plus Rs 54,000 crore (for Essar Steel).” After the National Company Law Tribunal’s (NCLT) Ahmedabad bench approved ArcelorMittal’s Rs 42,000-crore bid, Essar Steel threw its hat in the ring earlier this month.

Ruias, erstwhile promoters, may be allowed to enter race

NCLAT may consider allowing the founders of the Essar Group, the Ruias, and Essar Steel’s erstwhile promoters, to enter the race for the latter if ESAH can arrange for around Rs 1.4 lakh crore. The tribunal also wanted to know why ArcelorMittal must not be paying more for the asset. ArcelorMittal’s offer consists of an Rs 8,000-crore infusion into Essar Steel over a time period. To settle all bad debts to financial and operational creditors of Essar Steel, ESAH had offered to pay Rs 54,389 crore. A key part of the Insolvency and Bankruptcy Code looks at leaving out erstwhile promoters from bidding for assets in order to prevent them from taking the opportunity to regain control after having defaulted on loans.