Essar Steel auction: A perception game plays out in the public

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26 Aug, 2025 12:21

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As bids of ArcelorMittal and Numetal for Essar Steel are being evaluated this week, there is a parallel tussle playing out on mainstream media and social media platforms. This battle is not so much about as the merit of the bids as much as it is about the perception of the bidders’ eligibility.

Over the last couple of weeks, both the sides have been taking potshots at each other through press releases and media interviews. In addition, there is also a proxy war through anonymous Whatsapp forwards.

This writer has been tagged on tweets that promote one of the two companies in contention. The profile of the tweeters make for interesting read. While one is a “former web content writer, food blogger,” another’s profile reads – “Studied Pol Sci. Ryan International School, Cricket Lover and Politically Concerned.”

Surely, neither has connection with the steel industry, or with what is happening at the National Company Law Tribunal (NCLT), which is responsible for the auctions. So are these promoted tweets?

There have been high profile visits from both the sides. Last week, ArcelorMittal’s Lakshmi Mittal visited Finance Minister Arun Jaitley and later commented: “"I think we can create value in Essar Steel with our experience.”

Later, officials at ArcelorMittal reiterated that the company’s global experience in turning around operations make it the most eligible to acquire Essar Steel. The Indian steel company, owned by the Ruia family, had accumulated nearly Rs 50,000 crore in debt before being referred to the NCLT last year.

Meanwhile, ArcelorMittal’s India unit – ArcelorMittal India Private Limited - was assigned a long-term issuer rating of AA by credit rating agency ICRA, and the outlook on long-term rating was ‘Positive.’

It now also has the backing of Japan’s Nippon Steel, which has joined hands with ArcelorMittal for the Essar Steel bid. A press release on the same was sent out on March 2.

“But this was already known. What is the need for a press release now,” asked an official from the industry. “Is it a diversion tactic,” he added.

Charge from Russia

Not to be left behind, Numetal has sent out press releases highlighting the global footprint of its largest shareholder, VTB Capital. It is a unit of Russia’s VTB Bank, claimed to be among the largest emerging banking groups with assets worth $215 billion.

Numetal’s other shareholder includes TPE, which  played an instrumental role in setting up of most of India's public sector-owned steel plants, including Bokaro and Bhilai based facilities of Steel Authority of India.

Late last week, VTB Capital’s Vice Chairman Makram Abboud visited India and taking a direct shot at competition, said in an interview to Business Standard that ArcelorMittal’s bid was illegal. “We have taken legal opinion from three different law firms and they are all of the opinion that ArcelorMittal and its promoters’ investments in two non-performing assets (NPAs) in India will debar it from bidding. Hence, we are confident that it is out of the game, but has made the offer just to spoil the game for others,” Makram told the newspaper.

The larger issue

As the perception game plays out, the bids are being scrutinised. While ArcelorMittal’s bid is hampered by its stake in defaulting companies such as Uttam Galva and KSS Petron, Numetal faces the hurdle of its connection with the Ruia family.

Mittal’s company has since sold its stake in Uttam Galva, but doubts remain if that is enough.

Rewant Ruia, son of Essar co-founder Ravi Ruia, is a minority shareholder in Numetal. The consortium has clarified that its shareholders would be willing to buy out Rewant’s stake if the need arises.

For both, Lakshmi Mittal and the Ruia brothers, the auction couldn’t be more important. Mittal has been struggling to gain a presence in India, and the Essar Steel auction is one of the billionaire’s last opportunities to make an impact in his home country.

For the Ruia brothers – Shashi and Ravi – Essar Steel was one of their crown jewels. The 10 million- per-ton plant in Hazira is one of the biggest single-location steelmaking facilities in the world. They will loath to lose it.

The resolution professional overseeing the auction is slated to meet the Committee of Creditors with the bids today. The professional is expected to submit the eligible bids to the Committee.

But given the close evaluation of these bids – accompanied by frequent exchange of information with the bidders – sources say that the meeting could be delayed to Wednesday.