The apparent delay in settling the Essar Steel bankruptcy case may be beginning to affect India's credibility as a destination for foreign direct investment (FDI), reports show.
A row has broken out over the rights of the original promoters with the National Company Law Tribunal (NCLT) set to rule on the claim of Ruia group to make a bid for the troubled steelmaker.
A suggestion from JSW Steel chairman and managing director Sajjan Jindal that the Ruia family be given a chance bid for Essar Steel has invited a strong response from ArcelorMittal.
The global steel giant has made an Rs 42,000 crore offer to the lenders of Essar Steel but the Ruia family's Essar Steel Asia Holding made an Rs 54,000 crore bid in the last minute.
The LN Mittal-led ArcelorMittal said that Jindal's remarks send a "negative signal" to the investors. "If the law is not implemented correctly and the rules are flouted, as suggested by some, this sends a negative signal about the certainty of India as an investment destination," said a spokesperson of ArcelorMittal, without directly mentioning Jindal's comments.
"It appears there are certain parties in India who would like that the IBC (Insolvency and Bankruptcy Code) not be implemented according to the law. The IBC was introduced for a very serious reason – to address a major problem with bad loans," a media report said.
However, industry sources believe that ArcelorMittal was taking aim at Jindal.
Jindal had told the media earlier that the Ruias should be given a chance to buy the Essar Steel. "It is their company if they're paying 100 per cent of the money, so why not," Jindal said, according to media reports.
Serious reason
"The process is not over till its over. And it is not over yet," he reportedly said.
Jindal's JSW Steel had joined hands with Numetal in the second round of Essar Steel's auction.
"It appears there are certain parties in India who would like that the IBC (Insolvency and Bankruptcy Code) not be implemented according to the law. The IBC was introduced for a very serious reason – to address a major problem with bad loans," a media report said.
"No company or individual can say they were not aware of the process and therefore should not expect to come in at a late stage, providing no details as to the financing of their offer after a decision has been taken by the Committee of Creditors. In the case of Essar Steel, opportunities have been provided to bidders for nearly a year to first be eligible and second, to make a compelling offer."
The next phase of the boardroom battle between the steel giants now moves to the NCLT where a ruling on the ownership issue will be decided.
