Essar Steel: Ruias have backing from Sajjan Jindal, VTB Bank but ball in SBI's court

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26 Aug, 2025 12:21

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The Ruias have got  backing of JSW Steel Chairman and Managing Director Sajjan Jindal, and there is a possible financial support coming from Russia's VTB Bank in their bid to retain Essar Steel, their crown jewel.

But much of these will matter only once they convince lenders, led by State Bank of India, to allow Essar Steel to withdraw from insolvency courts, as per clause 12A of the Insolvency and Bankruptcy Code.

According to the clause, 90 percent of the creditors need to vote in favour of the withdrawal.

The clause is keeping the Ruias in the game, even as the Supreme Court last week upheld the bankruptcy code, including Section 29A. The section bars promoters of defaulting companies from bidding for any stressed assets.

The Ruias had presented a Rs 54,000 crore proposal to withdraw Essar Steel from the insolvency courts. The offer is higher than the Rs 42,000-crore bid from ArcelorMittal, which though has the backing of the lenders.

The lenders have held that the Ruias' offer will only be considered if they are directed to do so by the courts.

The National Company Law Tribunal has heard these petitions, and is expected to give its order by January 31.

Jindal's view

Sajjan Jindal had created a flutter during the World Economic Forum in Davos last week, when he remarked that the Ruias should be given a chance to regain control of Essar Steel. He went on to add that his JSW Steel is still interested in the Ruia company.

JSW Steel had supported the Numetal consortium in the second round of the Essar Steel auction. But the insolvency courts had later made the second round bids invalid.

While the two sides - the Ruias and JSW Steel - are tightlipped on the form of 'interest' Jindal has on Essar Steel, sources told  Moneycontrol that the 'backing' depends on the lenders agreeing on the withdrawal.

Executives from the industry added that Russia's VTB Bank, which led the Numetal consortium, will bring the financial backing for the Ruias.

In 2014, VTB had provided $1 billion financing for Essar Oil, which was later bought by Rosneft, Russia's largest oil producer. Both VTB and Rosneft are backed by the Vladimir Putin government in Russia.

Bankers lead

But much depends on the NCLT hearing that is expected to come by January 31 and also on Essar Steel lenders.

Under Section 12A of the insolvency code, it is the applicant who initiated the insolvency process who has the right to file for withdrawal of a resolution case. In Essar Steel's case, the applicant is State Bank  of India.

"Nothing prevents them (the Ruias) from requesting SBI to initiate the process. It is ultimately SBI's prerogative whether it wants to take this commercial call," said Suharsh Sinha,  Consultant at law firm AZB & Partners.

The delay in resolving the Essar Steel case had seen SBI putting its exposure to the steelmaker on the block. SBI's loans to Essar Steel amount to Rs 15,431 crore.