ArcelorMittal forays into Indian steel market; completes Essar acquisition
New Delhi: Global steel giant ArcelorMittal on Monday said it has completed acquisition of Essar Steel, marking its entry into the Indian steel sector.
The Luxembourg-headquartered company has been eying to enter into Indian steel sector for long and had to give up its plans of two plants - 12 million tonnes each in Jharkhand and Odisha - over a decade back on account of various hurdles.
The deck for acquisition of Essar Steel by L N Mittal-led company for Rs 42,000 crore was finally cleared by the Supreme Court last month.
This is the single-biggest recovery under the Insolvency and Bankruptcy Code (IBC) process.
The company said it has formed a joint venture with Nippon Steel (AM/NS India) to own and operate the debt-ridden firm and Aditya Mittal, President and CFO of ArcelorMittal, has been appointed as its Chairman.
"ArcelorMittal announces that it has today completed the acquisition of Essar Steel India Limited (ESIL), and simultaneously established a joint venture with Nippon Steel Corporation (Nippon Steel), called ArcelorMittal Nippon Steel India Limited (AM/NS India), which will own and operate ESIL," ArcelorMittal said in a statement.
It said Dilip Oommen of Essar has been appointed AM/NS India's CEO.
ArcelorMittal holds 60 per cent of AM/NS India, with Nippon Steel holding the balance.
"The acquisition of Essar Steel is an important strategic step for ArcelorMittal. India has long been identified as an attractive market for our company and we have been looking at suitable opportunities to build a meaningful production presence in the country for over a decade," said Lakshmi Mittal, Chairman and CEO of ArcelorMittal.
Both India and Essar's appeal are enduring, he said, adding Essar has sizeable, profitable, well-located operations and long-term growth potential for the economy and therefore domestic steel demand are well known.
The transaction also demonstrates how India benefits from the Insolvency and Bankruptcy Code, a genuinely progressive reform whose positive impact will be felt widely across the Indian economy, Mittal said.
"We are also delighted to be embarking on this together with Nippon Steel, with whom we have a trusted, long-term relationship. Our combined strengths and technology will bring many new opportunities which will allow us to make a positive contribution to India's target to grow steelmaking capacity to 300 million tonnes per annum by 2030, and for its manufacturing sector more broadly," he said.
AM/NS India manufactures flat steel, plates and pipes mainly at its integrated steel mill with nominal crude steel production capacity of 9.6 million tonnes per year in India. The company also has a significant sales network and manufacturing plants producing pellets, a raw material of steel.
Nippon Steel and ArcelorMittal will bring out AM/NS India's potential by providing it with their respective business experience and world-leading advanced technologies, so as to promptly implement the resolution plan and realise its further business expansion, said Eiji Hashimoto, Representative Director and President of Nippon Steel.
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