JSW Steel wants Essar Steel auction to be done online

New Delhi, Apr 30: With the auction of Essar Steel getting stuck in legal tangles, JSW Steel now wants the proceedings to be done online.
“In all probability, the legal contentions will eventually land up in Supreme Court, making the auction even further delayed,” a source close to the company said
The initial deadline for the resolution process was set for April 29. This has been pushed to the end of May.
As of now, the two bidders – Numetal and ArcelorMittal – have approached the National Company Law Appellate Tribunal (NCLAT) on several technical issues over the eligibility controversy.
While the Tribunal will hear them on May 17, Essar Steel’s lenders are set to hear from the two bidders on Wednesday, May 2. Lenders had last week asked Numetal and ArcelorMittal to revise their bids and make them compliant.
“Just like the coal blocks were auctioned online, Essar Steel auction can be shifted online. This will help lenders maximise the value of Essar Steel, as other Indian players and foreign companies can also join in,” the executive quoted above added.
JSW Steel had earlier written to the lenders sharing its interest to participate in the bidding for Essar Steel and asked for a fresh round of bids. The banks are yet to respond to the letter.
For the auction to take place, the lenders will need to call for a fresh round of bids. Also, industry officials point out the Insolvency and Bankruptcy Code doesn’t provide for auctions. “This will be challenged unless an amendment is brought in,” said an executive.
An amendment to the MMDR Act in 2015, had made auctions the mandatory route for allocation of mines. Reports say 33 non-coal mines have been auctioned till now, with another 95 leases to be put on the block this year.
Legal tangles
Numetal and ArcelorMittal had earlier approached the National Company Law Tribunal (NCLT) just before their bids for Essar Steel were termed ineligible by the resolution professional.
Following a lengthy hearing, the Tribunal asked the lenders to reconsider the two bids. But Numetal approached the NCLAT, challenging the provision. It argued against time given to ArcelorMittal to revise its bid.
The lenders are said to be exploring options to look at only the commercial aspects of the two bids, in order to expedite the process. ArcelorMittal’s bid is said to be higher than Numetal’s but both bids involved high haircuts for the bankers.