Vedanta enters steel making with acquisition of insolvent Electrosteel Steels
05 June 2018
Anil Agarwal-promoted Vedanta Ltd on Monday took control of Electrosteel Steels Ltd (ESL) acquired under a resolution plan and became effective on Monday, thus entering the business of steelmaking.
Vedanta Star Limited (VSL), a wholly-owned subsidiary of Vedanta, has deposited the upfront amount of Rs5,320 crore in the escrow account of ESL, completing the insolvency resolution process of debt-laden Electro Steels Ltd.
"Pursuant to the order dated May 30, 2018 of National Company Law Appellate Tribunal, Vedanta is implementing the approved Resolution Plan for Electrosteel Steels Limited," the company said in a statement.
The company also put in place a new board of directors for ESL.
Vedanta, which will hold 90 per cent in ESL, will fund the investment through a combination of equity of Rs1,765 crore and inter-corporate loan of Rs3,555 crore.
The National Company Law Appellate Tribunal (NCLAT) last Wednesday permitted Vedanta to make an upfront payment to the Committee of Creditors (CoC) for ESL.
Electrosteel now becomes the second steel company to successfully complete the insolvency process after Tata Steel took control of Bhushan Steel last month.
Electrosteel has a planned steel-making capacity of 2.51 million tonnes and a commissioned capacity of 1.5 million tonnes.
Vedanta said the Electrosteel acquisition will complement its existing iron ore business as the vertical integration of steel manufacturing capabilities has the potential to generate significant efficiencies.