Sterlite stir: Thoothukudi casts a shadow on Vedanta bid for Electrosteel

Protests against Sterlite Copper in Thoothukudi, Tamil Nadu, are casting a shadow on the ongoing resolution process for Electrosteel Steels, with Renaissance Steel India, Sterlite’s rival in the race to acquire the company, planning to bring the matter up in its argument against Vedanta’s eligibility.

Legal sources close to Renaissance said this would be raised in the appellate tribunal.

“This is what we have been saying. Vedanta has a chequered history of corporate social responsibility and is indifferent towards the requirement of approvals,” a source said.

Sterlite Copper handles the copper business of Vedanta. On Thursday, the Tamil Nadu government said it would take the legal route to ensure that its copper plant was shut down after protests led to police firing, in which 13 people were killed. 

The Tamil Nadu Pollution Control Board (TNPCB) had on Wednesday ordered the closure of the plant and disconnection of power supply to it. 

The TNPCB in its order said the consent to operate was rejected because the plant did not comply with certain conditions. 

The Sterlite management has, however, denied this and said it had complied with all regulations. The matter will come up for hearing before the Appellate Board on June 6.

Vedanta did not comment on Renaissance’s plan to drag the Sterlite issue in matter concerning Electrosteel. 

Renaissance group Chairman Abhishek Dalmia did not comment on it, either.

Renaissance had challenged the approval to Vedanta’s resolution plan for Electrosteel on the grounds that Konkola Copper Mines, a connected party, had been convicted in a court in Zambia for violating provisions of the Environmental Protection and Pollution Control Regulation. According to Renaissance, Vedanta was hence ineligible under Section 29A of the Insolvency and Bankruptcy Code (IBC).

Clause (d) of 29A says a person will not be eligible to submit a resolution plan if such a person, or any other person acting jointly or in concert with such a person, has been convicted for any offence punishable with imprisonment for two years or more.

Renaissance had challenged Vedanta and Tata Steel’s eligibility before the Kolkata Bench of the National Company Law Tribunal (NCLT) under Section 29A. Tata Steel was the second-highest bidder for Electrosteel while Vedanta’s Rs 53.20 billion bid was approved as the successful bid by the NCLT. Renaissance was also a bidder for Electrosteel.

The Kolkata Bench had, however, approved Vedanta’s resolution plan on April 17 because it did not find anything to suggest that Konkola Copper Mines was a habitual offender. 

It also said the Magistrate Court could have sentenced a representative of the company for a period of three years, as provided under the law, but did not.

Renaissance appealed against the NCLT approval in the National Company Law Appellate Tribunal (NCLAT), which had ordered the status quo on the plan on May 1. 

Electrosteel is currently managed by a steering committee, which has members from lenders and Vedanta. 

Electrosteel informed the stock exchanges on Friday it would not be able to meet the requirement of Regulation 33 of the Sebi LODR (Listing Obligations and Disclosure Requirements) to consider and approve the audited standalone financial results of the company for the quarter/year ended March 31, 2018 for two reasons: Mismatch of liabilities of the company on its books of accounts and those admitted by the resolution professional from July 21, 2017 to April 17, 2018, and the impact on the amount of assets being carried on the books of accounts of the company pending such resolution.

The Renaissance plea, which has been admitted in the NCLAT, is scheduled for hearing on May 28.