According to a release, the company has also established a joint venture with Nippon Steel called ArcelorMittal Nippon Steel India (AM/NS India), which will own and operate Essar Steel.
World's largest steelmaker ArcelorMittal announced that it has completed the acquisition of Essar Steel on December 16, thereby giving its Chairman and CEO Lakshmi Mittal a presence in his home market, more than a decade after his first attempt.
In a statement, the company added that it has established a joint venture with Nippon Steel, called ArcelorMittal Nippon Steel India (AM/NS India), which will own and operate Essar Steel.
ArcelorMittal holds 60 percent of AM/NS India, with Nippon Steel, the world's third largest steelmaker, holding the balance.
Aditya Mittal, President and CFO of ArcelorMittal, has been appointed Chairman of AM/NS India, and Dilip Oommen, a long time veteran at Essar, has been appointed AM/NS India’s CEO.
Speaking on the development, Lakshmi Mittal, said, “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 billionaire entrepreneur added.
The announcement also brings closure to one of the most keenly fought corporate battles, which started in August 2017, after Essar Steel was admitted to the National Company Law Tribunal. The company owed more than Rs 49,000 crore to dozen banks. State Bank of India has among the highest exposure, with over Rs 15,000 crore. Others include ICICI Bank, IDBI Bank and Syndicate Bank.
ArcelorMittal had initiated payment for the acquisition of debt-ridden Essar Steel for Rs 42,000 crore on December 13, making it the single-biggest recovery under the Insolvency and Bankruptcy Code (IBC).
On November 15, the Supreme Court had paved the way for ArcelorMittal's takeover of Essar Steel for Rs 42,000 crore and set aside the July 4 National Company Law Appellate Tribunal (NCLAT) order giving equal status to financial creditors and operational creditors.
For Nippon Steel, the deal brings a presence in one of the fastest growing steel markets in the world. “AM/NS India manufactures flat steel, steel plates and steel pipes mainly at its integrated steel mill with nominal crude steel production capacity of 9.6 million tonnes per year in India, one of the most promising steel markets in the world," said Eiji Hashimoto, Representative Director and President of Nippon Steel.
According to the plan that ARcelorMittal had initially submitted, it will also invest about Rs 8,000 crore in Essar Steel.
"We have in place a targeted capital expenditure plan designed to build on our combined management strength, operational expertise..." said Aditya Mittal.
The newly designated Chairman's focus will be to bring in raw material linkages for the acquired company. While it is bidding for iron ore mines in Odisha, ArcelorMittal has also emerged as the highest bidder for Odisha Slurry Pipeline Infrastructure (OSPL). The pipeline supplies iron ore to Essar Steel's pellet plant in Odisha. The pellets are then taken to Hazira to be used in Essar Steel's plants.ArcelorMittal has given a bid of Rs 2,300 crore bid.