ArcelorMittal’s foray into the Indian market was complete with its acquisition of Essar Steel giving the world’s largest steel producer a sizeable foothold in the India steel market. Its winning bid – ₹42,000 crore is considered a good deal as it represents 85 percent of the total amount owed by Essar Steel.
The announcement marks the final stretch of the 14 month battle however, a few wrinkles still persist that needs ironing out. Bankers have reportedly asked for a higher amount to be paid by Arcelor for the complete transfer of control to the Luxembourg based steel company. Arcelor has reportedly offered ₹35,000 crore while also agreeing to infuse an additional amount to purchase the Odisha Slurry Pipeline Infrastructure which is a separate subsidiary of Essar Steel used to transfer iron ore from mines in Odisha to the Paradip Port from where it is take to the Hazira-based Essar plant in Gujarat.
Arcelor was picked by the CoC due to several factors. Apart from being the world’s largest producer of steel, the company has a long and good track record of buying and turning around defaulting steel manufacturing companies. However, with Essar, the company will have its work cut out for it as bottlenecks in Essar’s steelmaking and casting process curtails its production to a maximum of 6.1 million tonnes as compared to a possible 9.6 million tonnes.