 "Essar Steel: Numetal moves NCLAT ahead of bankers' meet on Friday")
Ahead of the lenders' meeting on Friday, which may ask for fresh bids for the bankrupt Essar Steel's assets, Numetal on Thursday approached the National Company Law Appellate Tribunal (NCLAT).
Numetal's application at NCLAT is aimed at pre-empting a possible move by the lenders to call for fresh bids as the two bids submitted peg the value of the assets only under 40 per cent of the Rs 450 billion that Essar Steel owes to over 30 lenders.
The company is majority-owned by the Russian state-run lender VTB Bank's private equity arm VTB Capital and Ravi Ruia's son Rewant Ruia-controlled Aurora Trustss, which controls 25 per cent.
"We have moved an application at the NCLAT, which will be heard tomorrow," a Numetal India official told PTI seeking anonymity.
The official refused to share details saying the matter is subjudice.
The Section 29A (c) of the revised Insolvency and Bankruptcy Code (IBC) allows a defaulted promoter, if wants to bid for the asset through the National Company Law Tribunal (NCLT) to do so provided he clears the arrears and make the account standardised.
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Following last Thursday's direction by the Ahmedabad bench of the NCLT which had asked the lenders to reconsider the first bids submitted by Numetal and ArcelorMittal on February 12 and reject the second round of bids submitted by them on April 2 along with Vedanta, the bankers had met here on Tuesday but could not take a call as the bids submitted by them were reportedly valued very low.
It had also asked the resolution professional (RP) and the lenders to give 30-days time to these bidders to clear their defaulted accounts.
According to media reports, ArcelorMittal had quoted higher than Numetal, which still is below the fair value as it quotes only 40 per cent of Rs 450 billion due to them from Essar Steel, which runs a 10-million tonne steel plant at Hazira on the west coast of Gujarat.
Bankers or the committee of creditors are expected to meet again tomorrow here to decide the next course of action. The bankers are debating whether they should call for a fresh round of bids, which has already evoked interest from JSW Steel in association with Numetal and Vedanta Resources.
The first round of bids were rejected by the RP and the lenders, citing technical reasons or ownership issues (promoters of these bidders being related to the original defaulting promoters) leading to the re-bids, which had three bidders - Numetal-JSW, ArcelorMittal-Nippon Steel and Vedanta.
Numetal was set up only last October by the Ruias - four months after the Essar Steel was sent to the NCLT in Mauritius. Originally, it was floated by various entities led by Aurora Trusts controlled by Rewant Ruia, who is a defaulter in Essar Steel.
Later, Rewant sold 75 per cent in the company to the private equity arm of the largest Russian lender VTB Bank (which took over the group's flagship refinery Essar Oil in Vadinar for $13 billion last year) and a Russian engineering firm TPE and some other investors.
The company claims that Rewant does not enjoy any managerial position but is only an investor. But Aurora Trusts is in turn fully held by Aurora Enterprises, in which the ultimate beneficiary is only Rewant according to the company documents.
Numetal had gone public saying that if eligibility was an issue because of Aurora Trusts, they were ready to buy out the Rewant but nothing to that effect has been done yet.
What did in the bid by ArcelorMittal, which is the world's largest alloy maker, is that it had a joint venture with Uttam Galva Steel, which is also in the NCLT following a default of around Rs 60 billion loan.
Following the rejection of their bid by RP on March 21, the Mittals sold their stakes in the Uttam Galva and KSS Petron in slump sales and then joined hands with the Japanese alloy major Nippon to re-bid.
But what worked in their favour last Thursday at the NCLT was that the Clause C of the Section 29A of the IBC demands that the RP has to give up to 30 days additional time to the bidders/promoters to make the overdue amount and clear the account as standard.
The 270-day period for resolution under the IBC is due to end on April 29. However, this has been extended by a month as the NCLT decided to exclude the period between March 20 and April 19 when the matter had been in court from the resolution period.