NCLT Kolkata Bench approves Vedanta's bid to acquire Electrosteel Steels

Marco Green
April 17, 2018

Almost a year after the Reserve Bank of India sent out the first list of companies for insolvency proceedings, the banks have finally got a reason to smile, a haircut of 55 per cent notwithstanding. According to a person close to the development, Vedanta is offering close to Rs 5,000 crore for buying the debt-laden steel manufacturer from Kolkata.

Earlier this month, Renaissance had filed an application before the Division Bench, challenging the Committee of Creditors' (CoC) decision that Vedanta and Tata Steel are "eligible bidders" for Electrosteel Steels.

Competition Commission of India (CCI) and Securities and Exchange Board of India (SEBI) will now need to approve the transaction. SBI was the lead bank and had referred Electrosteel to NCLT in July a year ago at the direction of the Reserve Bank of India.

Electrosteel was incorporated in Ranchi as a public company on December 20, 2006, and has been listed on the BSE and NSE since 2010.

Electrosteel's total secured outstanding debt was Rs 12,376.61 crore as on 31 March 2017, according to its annual report.

The company was referred to the NCLT after accumulating Rs 13,000 crore in debts, including interests. Electrosteel owns and operates a greenfield integrated steel manufacturing facility near Bokaro, which has a capacity of 1.5 million tonnes per annum (MTPA) and the potential to increase to 2.5 MTPA.

Vedanta Ltd expects the acquisition to complement its existing iron ore business as the vertical integration of steel manufacturing capabilities has the potential to generate significant efficiencies.

"The consideration payable under the resolution plan and the transaction fees and expenses will be paid using the existing cash resources, " the release added.

London listed shares in Vedanta Resources were trading 1.9% lower at 700.40 pence in afternoon trade. It has operations in India, Zambia, Namibia, South Africa, Ireland and Australia. He will succeed interim CEO Kuldip Kaura.

Kirloskar Oil Engines Ltd is in separate talks with private equity firms.

Other reports by Click Lancashire

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