ArcelorMittal hopeful of bidding for ailing firms in India
ArcelorMittal is keen to bid for stressed steel firms in India and does not believe the recent changes in insolvency laws would be a barrier
World’s largest steel maker ArcelorMittal is keen to bid for stressed steel companies in India and does not believe the recent amendments to the Insolvency and Bankruptcy Code (IBC) would be a barrier.
The company was reacting to speculations that since it had invested in Indian steel maker Uttam Galva Steels Ltd, which was declared a non-performing asset (NPA) a year ago, it will be disqualified from bidding. It had expressed interest in bidding for Bhushan Steel, Bhushan Power & Steel and Essar Steel.
The recent amendments to the IBC not only bar defaulting promoters from bidding for stressed assets, but also have added a new section which prohibits promoters or sister concerns of companies with NPAs of more than a year. In order to bid, promoters will have to make the NPAs standard assets by paying the principal and interest.
ArcelorMittal clarified that they hold a non-controlling minority shareholding in Uttam Galva, have no representation on the board of directors, nor influence on management decisions. “As such, we are not a promoter of Uttam Galva. Therefore, there is no objective reason for ArcelorMittal to be prevented from bidding for any steel asset under the restructuring process,” it added.
In 2009, ArcelorMittal had bought a stake in Uttam Galva Steels. Last September, however, Uttam Galva was classified as an NPA and is in the Reserve Bank of India’s second list of major defaulters.