Prince Mathews Thomas Moneycontrol News
Even as it waits for the final word on the Essar Steel insolvency case, ArcelorMittal is also gradually, albeit slowly, progressing on its greenfield project in Karnataka.
"The company has completed all the necessary formalities for acquiring the land by signing and executing a lease cum sale agreement for 2,643.25 acres of land on December 26, 2018 and the project is currently under review," said the world's largest steelmaker in its recently released 2018 annual report.
ArcelorMittal had in 2010 signed an agreement for setting up the Karnataka plant, with a capacity plan of six million tonne a year. The facility, which would include a captive power plant of 750 MW, needs an investment of $6.5 billion.
Industry executives, however, say that the company may pace the project execution according to the verdict on the Essar Steel insolvency.
The LN Mittal-company was selected as the preferred bidder by Essar Steel lenders late last year. But a last-minute proposal by the Ruias and scores of legal cases relating to operational creditors of Essar Steel has slowed down the insolvency process. The Ruias' proposal stands at Rs 54,000 crore as against ArcelorMittal's Rs 42,000 crore.
Despite Ruias' higher amount, the insolvency courts have not faulted lenders for choosing ArcelorMittal's bid. Hearing on a petition to speed up the process, the National Company Law Appellate Tribunal (NCLAT) has asked the Ahmedabad bench of National Company Law Tribunal (NCLT) to pass an order on the case by March 8.
A senior industry executive said that an order may be expected on March 8.
Making a choice ArcelorMittal has its nose ahead at the moment, and if the company does manage to bag Essar Steel, then the company could go slow on the greenfield project in Karnataka.
The Essar Steel acquisition will be among its biggest, and ArcelorMittal has already readied a $7-billion term facility agreement with lenders.
Apart from the upfront payment of Rs 42,000 crore, ArcelorMittal's resolution plan for Essar Steel also includes an investment of a further Rs 8,000 crore "to support operational improvement, increase production
levels and deliver enhanced levels of profitability. The company provided a $0.6 billion performance guarantee in connection with the execution of the resolution plan," the annual report cited above said.
ArcelorMittal had signed the agreement for the Karnataka project after facing setbacks in its planned investments in Odisha and Jharkhand. It has since scraped the Odisha project, which was signed with much fanfare in 2005. It was LN Mittal's first step inside his home market, a moment underlined by his emergence in the world steel industry.
At the moment though, all eyes will be on the insolvency court's order.
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