Tata Steel Ltd. is looking to increase its bid for Electrosteel Steels Ltd. that it submitted earlier this month, three people in the know told BloombergQuint requesting anonymity.
The steel giant had submitted a resolution plan for Kolkata-based Electrosteel Steels under the Insolvency and Bankruptcy Code. It has now sought more time from the resolution professional for due diligence, the first person quoted above said.
The move comes after resolution professional Dhaivat Anjaria opened the bids with an independent evaluator. Tata Steel didn’t respond to emailed queries. Anjaria didn’t offer any comments.
Anil Agarwal-led Vedanta Group emerged the highest bidder for Electrosteel Steels by quoting Rs 4,500 crore, the Economic Times reported on Jan. 9 citing unnamed people. Tata Steel’s bid was worth Rs 3,500 crore, it said. In a stock exchange notification earlier this month, Electrosteel Steels said that apart from Vedanta and Tata Steel, Renaissance Group and Edelweiss Asset Reconstruction Company Ltd. had submitted bids for a resolution plan.
Also Read: Why Anil Agarwal Wants Debt-Ridden Electrosteel Steels
There’s a grey area in the Insolvency and Bankruptcy Code which does not specify how many times a bid can be revised during a resolution process, the second people quoted above said. Since the committee of creditors in Electrosteel Steels is yet to see the bids, it’s now up to the resolution professional to either accept or reject Tata Steel’s request, the person said.
Meanwhile Agarwal, in an interview with BloombergQuint, said since Vedanta Group has an iron ore mine in Jharkhand, Electrosteel Steels would be a good fit for it. The entry into steel is to convert iron ore, he said on the sidelines of the World Economic Forum at Davos.
India, a net importer of iron ore, prefers that miners sell it for domestic consumption rather than exports. Hence, it’s more profitable for miners to convert it into steel before selling.
Electrosteel Steels owes lenders more than Rs 13,000 crore– about Rs 5,000 crore to State Bank of India alone– according to information available on the steelmaker’s website. It owes operational creditors Rs 191.6 crore, the resolution professional has acknowledged.
It’s among the 12 large corporate accounts that the Reserve Bank of India identified in June last year for insolvency resolution. The regulator identified another 29 accounts in August, most of which are expected to be admitted under the insolvency process this month.
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