ArcelorMittal heads to court over legitimacy of Essar Steel bid by Numetal

Mumbai: Billionaire Lakshmi Mittal’s ArcelorMittal will on Wednesday challenge in court the legitimacy of a bid for Essar Steel India Ltd. by a group led by Russia’s VTB Capital, intensifying the battle for the biggest industry asset yet to be sold under a new bankruptcy law.

Mittal’s steelmaker has several reasons to question the eligibility of the VTB-led Numetal Ltd. group, including that a company controlled by the family of the founder of Essar Steel was part of the consortium at the time of an initial round of bidding, Brian Aranha, an executive president at ArcelorMittal, said in an interview in Mumbai on Tuesday. Under India’s bankruptcy laws, owners of insolvent firms aren’t eligible to bid for assets. The case will be heard in the company court in Ahmedabad.

Numetal’s bids remain eligible and the company has approached the court to reinforce its suitability, while at the same time questioning the bid by Mittal’s company, a Numetal spokesman said in a text message late Tuesday. He didn’t elaborate on the reasons for eligibility but said VTB Capital UK is not affected by sanctions by US and the European Union on Russia.

Aurora Enterprises — a part of the Numetal-led consortium that’s backed by the son of one of Essar’s founders — has since been bought out of the bidding group by India’s No. 1 producer of the alloy JSW Steel Ltd., according to people familiar with the matter.

Essar Steel