Mumbai: 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.
In one of the biggest influxes of FDI in brownfield project, steel and mining major ArcelorMittal and Nippon Steel have infused around Rs 42,000 crore ($6 billion) for its stake purchase in debt-ridden Essar Steel. 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. It said Dilip Oommen of Essar has been appointed AM/NS India's CEO. ArcelorMittal holds 60% 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.
