New Delhi: Bankers are holding divergent views on the way forward for beleaguered Essar Steel, which is up for auction.

While a section of bankers feels the bids of ArcelorMittal and Numetal Mauritius should be scrapped and fresh applications sought, the other camp is of the view that both the bids should be evaluated after advisories to both the aspirants on certain technical issues.

MUMBAI: Lenders led by State Bank of India are likely to seek another round of bids for Essar Steel after the resolution professional (RP) concluded that both offers — by ArcelorMittal and Numetal — may not be valid under the current Insolvency and Bankruptcy Code (IBC), said two senior bank officials who did not want to be named.

“The committee of creditors (CoC) will meet on Wednesday to discuss the option of going for a second round of bidding for Essar Steel,” said one of them. In all likelihood, lenders will set April 2 as the last date for submitting binding bids afresh.

The resolution professional (RP) for Essar Steel is unlikely to take a decision on the resolution plans it has received from ArcelorMittal and Numetal until the government provides more clarification on Article 29A of the Insolvency and Bankruptcy Code (Amendment) Bill 2017, sources said. Article 29 A spells out the criteria on the basis of which a bidder can be considered ineligible to bid for assets admitted by the National Company Law Tribunal for resolution.

Mumbai: Early signals emanating from ArcelorMittal and Numetal, the only companies to have placed binding bids to acquire Essar Steel, hint at a protracted legal battle that could mire the resolution of the steelmaker’s debts.

Although the lenders of Essar Steel have not decided whether they are eligible to bid for the company’s assets, both ArcelorMittal and Numetal have indicated that they will pursue legal options if their bids are scrapped.

ArcelorMittal will scale up the capacity of Essar Steel plant to 18 million tonnes (mt), making it a significant player in the growing Indian steel market.

“It is now operating at 5 mt and can be ramped up to 8.5 mt. The aspiration is to take the capacity to 18 mt,” sources in ArcelorMittal said.

After Russian bank VTB termed ArcelorMittal’s bid for Essar SteelBSE 0.41 % ineligible, the company hit back on Monday, saying that its offer is eligible. “We are confident about the integrity of the process, which will be adjudicated by the resolution professional. We continue to believe our bid is eligible and that, as the world’s leading steel company in partnership with Nippon Steel and Sumitomo Metal, we have unrivalled industry expertise and a demonstrable track record that is very relevant for Essar Steel,” Arcelor-Mittal said in a statement.

Mumbai: NuMetal Ltd, which has bid for bankrupt Essar Steel Ltd, is willing to drop Rewant Ruia as a consortium partner if the situation so demands, a top official of the company said in an interview.

Rewant Ruia is the son of Ravi Ruia, vice-chairman of Essar Group.

The worlds biggest steelmaker, ArcelorMittal, and Japan’s top mill will form a partnership to bid for Essar Steel India Ltd., the insolvent producer that could fetch at least $6 billion. Arcelor and Nippon Steel & Sumitomo Metal Corp. said in a statement they have joined the bidding for Essar, which is on the block after entering an Indian government-mandated process designed to clean-up companies that can’t repay their debts.

Essar Steel is the best fit for ArcelorMittal to put Lakshmi Mittal’s stamp in the world’s fastest growing market, a top executive at the Luxembourg-based company said.

“We have been interested in entering India for a long time. This opportunity has come up now. We have looked at it and the other alternatives, too,” Brian Aranha, head of global strategy at the world’s largest steelmaker, told ET on Tuesday.

Calcutta: ArcelorMittal and Numetal Ltd are trying to make a case to establish their credentials as turnaround specialists for stressed assets even as their fate as eligible bidders of Essar Steel continues to remain wrapped in mystery, at least till this weekend.

ArcelorMittal, the world's largest steel maker, which boasts of 50 mergers and acquisitions over the past 25 years, cited several global benchmarks in reviving underperforming steel plants across geographies to make a pitch for Essar Steel, which has struggled to operate as a profitable venture on a sustained basis, especially because of a high debt amounting to Rs 44,000 crore.

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