JSW Steel might not be 'done and dusted' with insolvent Essar Steel

It appears there are certain parties in India who would like to see that the IBC is not implemented according to the law

JSW Steel’s interest in insolvent Essar Steel does not seem over.

“It’s not done and dusted. It’s not over till it’s over,” said Sajjan Jindal, chairman, JSW Group, in an interview to BloombergQuint, at the prospects of a partnership with the Ruias for Essar Steel.

Adding: “There could be. There is a possibility. Whatever deal will happen, it will happen upfront.” Jindal is in Davos, Switzerland, for the World Economic Forum meet.

JSW Steel was in the race for Essar as an investor in a step-down subsidiary of Numetal, in which Rewant Ruia, part of the promoter family, had a minority interest. However, the Supreme Court order which directed both ArcelorMittal and Numetal to pay for the defaulting firms they were associated with had practically put the latter and, in turn, JSW out of the race.

ArcelorMittal paid for Uttam Galva Steels and KSS Petron — two companies classified by lender banks as non-performing assets for more than a year. These had earlier rendered it ineligible, according to Insolvency and Bankruptcy Code (IBC) rules. It then emerged as the preferred bidder for Essar and its resolution plan is with the National Company Law Tribunal (NCLT). 

However, the latter is also hearing a case on a competing bid from the promoter group, the Ruias. ArcelorMittal has offered Rs 42,000 crore for Essar, while the Ruias have offered a settlement proposal of Rs 54,389 crore. The NCLT is expected by January 31 to rule on whether the Ruia proposal is maintanable.

On Tuesday, Jindal said in the interview to Bloomber Quint: “They (Ruias) should be given a chance. It is their company; if they’re paying 100 per cent of the money, why not?”

He also said that even if the Ruias’ offer was in conflict with the bankruptcy law, it would be a crucial decision for any judicial system to overlook Rs 12,000 crore of public money coming back. “It will be very difficult to say that Rs 12,000 crore is not a big deal.”

Jindal’s statements evoked a sharp reaction from ArcelorMittal. Its spokesperson said, "It appears there are certain parties in India who would like that the IBC not be implemented according to the law." 

The spokesperson said the IBC was introduced to address a major problem with bad loans. “If the law is not implemented correctly and the rules are flouted, as suggested by some, this sends a negative signal about the certainty of India as an investment destination. 

The opportunity to make an offer for the assets in the IBC process has been very transparent. No company or individual can say they were not aware of the process and, therefore, should not expect to come in at a late stage, providing no details as to the financing of their offer, after a decision has been taken by the Committee of Creditors.” 

Adding: “In the case of Essar Steel, opportunities have been provided to bidders for nearly a year to first be eligible and, second, to make a compelling offer. ArcelorMittal has followed the process from the start. We fully expect the process to continue to be implemented correctly and as per the law, and that statements attempting to convince otherwise not be given any credibility."