After insolvency, Essar Steel India Limited was acquired by ArcelorMittal Nippon Steel India Limited.[4]
History
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History of the company reach back to 1 June 1976 when specialised marine construction company Essar Construction Limited was incorporated as a part of Essar Group. Essar Steel was a division of Essar Construction, responsible for manufacturing of hot briquetted sponge iron.[5] On 19 August 1987, the company changed its name to Essar Gujarat Limited and on 4 December 1995, to Essar Steel Limited.[6]
In 1994–1995, a new plant for manufacture of hot rolled coils was commissioned in Hazira. A pelletisation plant was set up at Visakhapatnam. P.T. Essar Dhananjaya joint venture was formed in Indonesia for manufacturing of cold rolled products.[5]
In 2003, Essar in cooperation with Stemcor set up a cold rolled steel unit.[5]
In 2007, Essar acquired the Canadian steel mill Algoma Steel.[7]
On 18 January 2012, the company changed its name to Essar Steel India Limited.[6]
Insolvency
The account had gone into corporate debt restructuring in 2002, with a debt of Rs 2,800 crore, according to an Economic Times report. However, it managed to exit the CDR ahead of schedule in 2006.[8]
A new cycle of distress began after the rapid expansion at Essar Steel’s Hazira steel operations at the turn of the decade. The expansion plan failed due to delay in environmental approvals and non-availability of natural gas, which was necessary for the plant to work at maximum efficiency. By 2015, the company was saddled with financial creditor dues exceeding Rs 49,000 crore. That year, the lenders made a first attempt to get the promoter family out of the driving seat at the company. At the time, the company was facing severe liquidity issues because of a drop in commodity prices and a failed expansion plan at its Hazira steel plant. At a meeting in November 2015, the lenders to Essar Steel, led by State Bank of India and ICICI Bank, had discussed the option of converting a portion of the companyõs debt into majority equity, which could be sold to potential investors later.[citation needed]
However, the plan was put on hold after the Ruia family told the lenders that they were willing to sell the company through an M&A process. The lenders appointed SBI Capital Markets and ICICI Securities as investment bank to look for potential buyers, however, they failed to find investor. While the search for a new bidder was on, the RBI concluded its asset quality review and asked banks to classify multiple large accounts, including Essar Steel, as non-performing assets by March 2016.[citation needed]
In October 2016, Essar Steel submitted a resolution plan to its lenders. It involved Rs 1,700 crore equity infusion from U.S.-based hedge fund in exchange for 24 percent equity in the company. The plan also involved conversion of a portion of the company’s debt into 36 percent equity to be held by the lenders. in June 2017, lenders had received a list of 12 stressed accounts from the RBI for immediate insolvency action under newly enacted insolvency Code. Essar Steel’s name featured among the largest of the 12 accounts. Insolvency became a reality. The account was finally admitted to the National Company Law Tribunal in August 2017.[9]
As per order of National Company Law Tribunal (NCLT) dated 2 August 2017, Essar Steel was admitted into insolvency proceedings and Mr. Satish Kumar Gupta was appointed as Interim Resolution Professional by NCLT. Mr. Satish Kumar Gupta was appointed as the Resolution Professional (RP) on 1 September 2017. RP issued Expression of Interest on 6 October 2017 and issued Request for Proposal on 24 December 2017. Accordingly, two Resolution Plans were received on 12 February 2018 from ArcelorMittal and Numetal. The Resolution Professional, after evaluating the Plans under Section 29A of IBC, held that both Resolution Applicants were ineligible. Same was challenged before NCLT.[citation needed]
National Company Law Appellate Tribunal (NCLAT) passed its order on 7 September 2018 and upheld the resolution professional’s view that the first round of bids submitted in February 2018 were ineligible. Above was challenged by ArcelorMittal in the Hon'ble Supreme Court.[citation needed]
On 4 October 2018, the Hon'ble Supreme Court gave its order thereby removing the ambiguity over the interpretation of the Section 29A of IBC and also upheld the ineligibility decision of the Resolution Professional but also gave another chance to both parties to clear any past outstanding dues and resubmit the Resolution Plan. Thereafter, ArcelorMittal cleared the dues to the tune of about Rs 7,500 crore to lenders of Uttam Galva and KSS Petron to become eligible to bid for ESIL. Thereafter, the Committee of Creditors of ESIL evaluated plans of ArcelorMittal and Vedanta and declared Resolution Plan of ArcelorMittal as H1. Post negotiation with ArcelorMittal, CoC approved the Resolution Plan of ArcelorMittal on 25 October 2018.[citation needed]
Essar Steel's Resolution Plan was approved on 8 March 2019 with certain modifications with respect to distribution by the National Company Law Tribunal (NCLT).[10] Post-approval of Resolution Plan by NCLT, a monitoring committee (MC) of ESIL was formed with ex RP, Mr. Satish Kumar Gupta as Chairman and 4 representatives from Financial Creditors and 3 representative from ArcelorMittal as members.[citation needed]
Above NCLT approval was challenged by certain Financial Creditors and Operational Creditors in NCLAT. After hearing these parties, NCLAT approved the Resolution Plan of ArcelorMittal on 4 July 2019 with certain modifications. NCLAT judgment was further challenged by CoC and financial creditors on the issue of distribution approved by NCLAT. By its judgment dated 15 November 2019, the Supreme Court approved the Resolution Plan of ArcelorMittal.[citation needed]
Above plan was implemented by ArcelorMittal on 16 December 2019 with payment as per plan and Essar Steel was acquired by ArcelorMittal Nippon Steel India Limited, a joint venture between ArcelorMittal and Nippon Steel Corporation. Mr. Aditya Mittal, President and CFO of ArcelorMittal has been appointed as Chairman of ArcelorMittal Nippon Steel and Mr. Dilip Oommen as CEO. Mr Aditya Mittal said that the acquisition gives us opportunity to contribute to India's expansion in infrastructure and urbanisation in coming decades.[11][12]
The company's US subsidiary declared bankruptcy amid allegations of fraud in late 2015.[13]
List of Steel Plants
ESSAR Steel India Limited, a fully integrated steel mill in Hazira, of the Surat district in Gujarat, India, with a steel-making capacity of 10 MTPA.[14]
Essar Steel Minnesota LLC, a company located in U.S. state of Minnesota, was declared bankrupt and its assets and mining rights sold in June 2017.[15]
ArcelorMittal S.A. is a Luxembourg-based multinational steel manufacturing corporation headquartered in Luxembourg City. It was formed in 2006 from the takeover and merger of Arcelor by Indian-owned Mittal Steel. ArcelorMittal is the second largest steel producer in the world, with an annual crude steel production of 78 million metric tonnes as of 2022. It is ranked 197th in the 2022 Fortune Global 500 ranking of the world's largest corporations. It employs around 154,000 people and its market capital is $20 billion. The total value of company assets is estimated to be around $94 billion.
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Essar Group is an Indian multinational conglomerate company, founded by Shashi Ruia and Ravi Ruia in 1969. The company, known as Essar Global Fund Limited (EGFL), owns a variety of assets in the core sectors of energy, infrastructure & logistics, metals & mining, technology, and retail. EGFL holds a nearly 100% stake in all its investments.
Tayo Rolls Limited is a now insolvent metal fabrication and processing company headquartered in Jamshedpur, India, and was a subsidiary of Tata Steel. Tayo Rolls' products were primarily cast rolls, forged rolls, special castings and pig iron.
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Essar Energy plc is Mauritius-based Indian energy company with assets in the power and oil and gas businesses. Headquartered in Port Louis, Mauritius and subsidiary of Essar Group, the firm has interests in both the power generation and petroleum industries. In May 2014 the company was acquired by its majority shareholder, Essar Global Fund Limited.
JSW Steel Limited is an Indian multinational steel producer based in Mumbai and is a flagship company of the JSW Group. After the merger of Bhushan Power & Steel, Ispat Steel and Jindal Vijayanagar Steel Limited, JSW Steel became India's second largest private sector steel company.
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The Board for Industrial and Financial Reconstruction (BIFR) was a development finance institution under the ownership of Ministry of Finance, Government of India, part of the Department of Financial Services of the Ministry of Finance. Set up in January 1987 by the Rajiv Gandhi government, its objective was to determine sickness of industrial companies and to assist in reviving those that may be viable and shutting down the others. On 1 December 2016, the Narendra Modi government dissolved BIFR and referred all proceedings to the National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) as per provisions of Insolvency and Bankruptcy Code.
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Bhander Power Plant is a natural gas-based thermal power plant located near Hazira in Surat district in the Indian state of Gujarat. The power plant was commissioned in 2006 by EPC Construction India Limited and commenced commercial operations in 2008 by the Essar Energy.
The National Company Law Tribunal (NCLT) is a quasi-judicial body in India that adjudicates issues relating to Indian companies. The tribunal, established under the Companies Act 2013, was constituted on 1 June 2016 by the government of India and is based on the recommendation of the V. Balakrishna Eradi committee on law relating to the insolvency and the winding up of companies.
The Insolvency and Bankruptcy Code, 2016 (IBC) is an Indian law which creates a consolidated framework that governs insolvency and bankruptcy proceedings for companies, partnership firms, and individuals.
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The National Company Law Appellate Tribunal (NCLAT) is a tribunal which was formed by the Central Government of India under Section 410 of the Companies Act, 2013. The NCLAT was formed as a body with an appellate jurisdiction at the same time when NCLT was established as a major reform as per powers granted to the Ministry of Corporate Affairs in India,
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