Should it bid for Essar Steel, or Bhushan Steel? Or both?

Late last year, ArcelorMittal had submitted expression of interests for both the companies, which had been referred to the  National Company Law Tribunal for insolvency proceedings after accumulating thousands of crores of rupees in debts.

But it wasn't until Aditya Mittal, President & CFO, ArcelorMittal, visited the Essar Steel facility in Hazira, Gujarat, in late 2017, that the company finally made up its mind. It was to be Essar Steel.

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"Before I visited we were not sure whether we would bid for Essar or Bhushan, but on visiting it (Essar Steel) was clear to me that this was the most complementary asset for ArcelorMittal’s ambitions in India," Mittal told Moneycontrol.

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"I was impressed when I visited Essar... It is a large, modern and well situated asset which we see great potential.

"I think we can add a lot of value to the asset which would benefit from our large international R&D budget, our extensive international experience across multiple steel products and our industry leading technology," said Mittal, whose father Lakshmi Mittal is the Chairman and CEO of ArcelorMittal.

The steel company is now locked in a battle with Numetal in the race for Essar Steel. On the other hand, Tata Steel is leading the race for Bhushan Steel, even as bankers are also considering a bid by Liberty House.

Later this week, both Numetal and ArcelorMittal are expected to get back to Essar Steel lenders, who had given the two bidders seven days to rework their resolution proposals.

Greenfield hurdles

In an earlier interview with Moneycontrol, Lakshmi Mittal had said that ArcelorMittal is focusing on Essar Steel to make its maiden manufacturing presence in India.

The company's planned greenfield projects in Jharkhand, Odisha and Karnataka have been non-starters.

"There are a number of well documented issues which have meant greenfield expansion in India is not straightforward even for domestic producers," said Aditya Mittal.

At the same time, he said the government wants to expand India's manufacturing presence.

"We have already seen the government introduce a number of important reforms, of which one is the IBC (Insolvency and Bankruptcy Code), and I would expect to see this continue and that will include delivering reform that supports much swifter execution of greenfield projects," said Aditya.

Similarities with Arcelor battle

Though the race for Essar Steel is far from over, many have already started making comparisons with Mittal Steel's battle with Arcelor in 2006. The battle had eventually led to the merger of the two companies, and creating the world's largest steelmaker.

"It’s difficult to compare any transaction.  Our offer for Arcelor was an offer to shareholders of a stock-market listed company and we had to convince shareholders that ultimately there was more value in these two companies being together than continuing separately," recounted Aditya.

But wasn't it long and intense like that battle for Essar Steel is turning out  to be?


"It was long and intense but ultimately everyone recognized that it was the right combination for the two companies and I believe that has been borne out over time," he added.


At the same time, Essar is different, added the 42-year-old.

"This is very different in that it is a process to acquire an asset that is bankrupt.  Let’s do a compare and contrast when this process is over," said Aditya.


本文來源:https://www.moneycontrol.com/news/business/arcelormittal-can-add-a-lot-of-value-to-essar-steel-says-aditya-mittal-2564573.html

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