Accordingly, ArcelorMittal completed the acquisition of the company whose debt levels had reached Rs 49,000 crore and simultaneously established a joint venture with Nippon Steel Corporation ArcelorMittal Nippon Steel India Limited (AM/NS India) which will own and operate ESIL.
The majority stake in the new entity is held by ArcelorMittal at 60 per cent, while Nippon Steel holds the balance.
As per a company statement, Aditya Mittal, President and CFO of ArcelorMittal, has been appointed Chairman of AM/NS India, and Dilip Oommen has been appointed AM/NS India's CEO.
Commenting on the development, Lakshmi Mittal, Chairman and CEO of ArcelorMittal, was quoted in the statement as saying: "The acquisition of Essar Steel is an important strategic step for ArcelorMittal. India has long been identified as an attractive market for our company and we have been looking at suitable opportunities to build a meaningful production presence in the country for over a decade."
"Both India and Essar's appeal are enduring. Essar has sizeable, profitable, well-located operations and the long-term growth potential for the Indian economy and therefore Indian steel demand are well known. The transaction also demonstrates how India benefits from the Insolvency and Bankruptcy Code, a genuinely progressive reform whose positive impact will be felt widely across the Indian economy."
AM/NS India is an integrated flat steel producer, and the largest steel company in western India.
Its current level of annualised crude steel production is c. 7.5 million tonnes. It also has iron ore pellet facilities in the east of India, with current annual capacity of 14 million tonnes per annum.
The resolution of Essar Steel can be marked as a landmark in the 3-year-old Insolvency and Bankruptcy Code (IBC). A major roadblock in the resolution was removed by the Supreme Court on November 15 as it set aside the National Company Law Appellate Tribunal's (NCLAT) ruling that provided for equal distribution of proceeds between financial and operational creditors.
The Essar case, which was among the first 12 cases to be referred by the Reserve Bank of India (RBI) for resolution, faced several hurdles as its promoter Prashant Ruia also tried to bid for the company and moved the appellate tribunal for rejection of the ArcelorMittal's Rs 42,000 crore bid.
( With inputs from IANS )