Friday, 16 November 2018



Essar Steel Ltd is an integrated steel producer of India. The company is engaged in business of manufacturing and processing of steel, steel hot rolled coils, steel cold rolled coils, steel plates, steel pipes and other steel products. It manufactures over 300 grades of steel conforming to quality standards of international certification agencies. It has annual capacity of 10 million tons supported by 20 million tons pellet making capacity, with strong presence in Asia and North America market.

Essar Steel Ltd got delisted from BSE/NSE in 2008. Since than it stands as an “Unlisted” Steel Manufacturing company.

ArcelorMittal is one of the world’s leading steel and mining company. It has annual production capacity of ~113 million tons of crude steel with industrial presence across 18 countries and 12 major research centers in the world. It is a largest producer of steel in North and South America, Africa, CIS region, growing presence in Asia, the EU, France, Germany, Belgium, Spain, Luxembourg, Poland, the Czech Republic and Romania.

ArcelorMittal is listed on New York stock exchange, Amsterdam, Paris, Luxembourg, Barcelona, Bilbao, Madrid and Valencia.


Essar Steel Ltd was reporting heavy losses since very long period of time. The losses reported has increased from Rs. 2785 Crs in FY 2013 to Rs. 5198 Crs in FY 2017. Due to accumulated losses company was finding it difficult to replay loans to creditors. Thus it was under the process of restricting the debt seeking approval from banks. Since the proposal for debt restricting was pending and under consideration by lenders and bankers, in 2016 - 2017 the operations of the company was kept on hold by the lenders and fixed percentage of sales revenue was paid to bank towards past loan.
During 2018 lenders approached NCLT under direction of RBI and invoked insolvency proceeding against Essar Steel Ltd under Insolvency and Bankruptcy Code 2016. Essar Steel Ltd owns Rs.45,000+ Crs to over 30+ banks.

Under Insolvency proceedings NCLT had called up the bidders to bid for the company. Under the bidding process Competition commission approved the acquisition of debt ridden Essar Steel ltd by ArcelorMittal at Rs. 42,000 Crs.
On 25th Oct 2018 more than 92% of lenders voted in favor of handling over Essar Steel Ltd to ArcelorMittal. In a statement, ArcelorMittal said its resolution plan for Essar Steel, which the lenders auctioned to recover over Rs 49,000 crore of unpaid loans, included “an upfront payment of Rs 42,000 crore” to settle debt and “a further Rs 8,000 crore of capital injection into the company to support operational improvement, increase production levels and deliver enhanced levels of profitability”. On the same day promoters of Essar Steel offered to pay lenders Rs 54,389 crore, including an upfront cash payment of Rs 47,507 crore to clear all dues of lenders, and pull the firm out of insolvency proceedings.


This takeover shall help Essar Steel to reduce its debt burden, improve its profitability over the period of time by revoking operational performance which was on hold and become a part of world’s leading steel company. All this restructuring and takeover will help in improving the shareholder’s value in future and regain their trust back in the company.
Q1 FY 2018 (Mn Tons)
Q1 FY 2017 (Mn Tons)
% Growth
Flat Steel Products
Value Added Products

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