Reiterating that ArcelorMittal is in favour of a quick resolution of issues delaying the auction of Essar Steel, the world’s largest steelmaker, however, alleged that Numetal has other ideas.

「Numetal has obviously decided to go down the legal route, to slow down the process. From our perspective we would like to have quick resolution,」 a spokesperson of ArcelorMittal told Moneycontrol on Tuesday.

The Numetal consortium is led by Russia’s VTB Capital and includes engineering company TFE and Indo International Trading.

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Both, ArcelorMittal and Numetal, on Monday placed their bids in the second round of bidding for Essar Steel. The second round saw significant changes.

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ArcelorMittal has joined hands with Japan’s largest steelmaker Nippon Steel & Sumitomo Metal, to buy Essar Steel. On the other hand, the Numetal consortium has got a new investor in the form of JSW Steel.

Vedanta Resources has also joined the race.

But the opening of the bids has been deferred until the Ahmedabad bench of National Company Law Tribunal (NCLT) decides on the pleas by Numetal and ArcelorMittal. Both the companies have challenged the decision by resolution professional, who termed their plans ineligible.

「We were in favour of the envelopes to be opened and the two processes to run side by side. We are not trying to slow down the process,」 another executive from ArcelorMittal said.

While ArcelorMittal’s investment in Uttam Galva was found to be the deterrent, in the case of Numetal, the connection of its minority shareholder Rewant Ruia with the promoter family of Essar Steel, became a bone of contention.

In the second round, Rewant Ruia’s Aurora Enterprises has exited the Numetal consortium. And ArcelorMittal has got the clearance from SEBI and exchanges to declassify itself as a promoter of Uttam Galva.

But minority shareholders of Uttam Galva have approached the NCLT and High Court challenging the declassification. They have also written to Uttam Galva’s bankers asking if ArcelorMittal was allowed to exit Uttam Galva without their permission.

「How is it that minority shareholders, whose total shareholding in Uttam Galva mount to $9,000, have become so resourceful and are spending big money in getting lawyers to fight the case,」 asked a source close to ArcelorMittal.

Change in consortium

With increasing stakes, the war of words has heightened between the two sides. A team of top lawyers and executives from both companies are expected to be in Ahmedabad tomorrow.

While Numetal is being represented by Mukul Rohatgi, the former Attorney General of India; ArcelorMittal’s case will be led by Congress leader Abhishek Manu Singhvi.

The entrance of JSW Steel, which has been vocal about its interest in Essar Steel after the first round of bidding, has added to the already heated race.

「The Numetal in the second round of bidding is not the same Numetal that was there in the first round…according to the RFP (request for proposal), a consortium can』t change while the auction is on,」 said a source close to ArcelorMittal.

There have also been questions on JSW Steel’s participation in the bidding despite not having submitted EoI, or expression of interest for Essar Steel.

But the Sajjan Jindal company refuted the charges.

「JSW Steel has always adhered to the law and followed all relevant requirements for our bid in this IBC competitive process as an investor along with another eligible Resolution Applicant. We are a strong eligible player to be part of this process," the company said in a statement.

Numetal eligibility

The change in its shareholders have also brought questions on Numetal's eligibility. 「Among the shareholders of Numetal, only Aurora Enterprises had submitted the EoI. Now with its exit, how cam Numetal’s bid be eligible,」 claimed an executive.

Numetal contended the argument and said in a statement: 『It is Numetal Ltd, and not Essar Communications Ltd or Aurora Enterprises Ltd, which had submitted Expression of Interest in response to the advertisement issued by the Resolution Professional of Essar Steel India Ltd."

A source close to Numetal added: "Under the RFP, potential resolution applicants have full flexibility to organize their affairs prior to the submission of bid. In the present case, the previous bid has been cancelled and fresh bids have been called. In a fresh bid, there is absolutely no restriction on who Numetal brings in as a partner or investor.

"In fact, during the first bid process, in order to accomodate Arcelor who wanted to bring in Nippon Steel even subsequent to submitting a bid, a clause was added to the RFP. This clause said that a Resolution Applicant can bring in an investor even after submitting the bid, provided the details of the proposed investor and the investment structure are disclosed in the bid. Therefore under the terms of the RFP,  JSW or any other investor can join Numetal in its bid even after the submission of the bid, provided details relating to their participation are disclosed in the bid."