Numetal, an SPV floated by the PE arm of Russian lender VTB Bank and Rewant Ruia, a Ruia family member, has claimed that its bid for Essar Steel has "solid legal backing" and if need be, "the other shareholders will buy out Rewant's" 25 per cent stake in the company.
The shareholders of Mauritius-based Numetal, a special purpose vehicle that focuses on steel and infra space along with manufacturing, are VTB Capital, the private equity arm of the VTB Bank; Russian steel and engineering major TPE.
Other promoters are Indo International, a Dubai-based steel trading firm promoted by an NRI, and the Aurora Trust in which Rewant Ruia, the son of one of the Essar Group promoters Ravi Ruia, is a beneficiary and owns 25 per cent in Numetal.
VTB Capital owns majority in the SPV.
Numetal and ArcelorMittal are the only two bidders for the 10-million tonne Essar Steel assets at Hazira, which owe the banks more than Rs 45,000 crore.
These companies, who have put up their bids on February 12, are battling with each other for the steel asset and are faced with questions on the eligibility of their bids.
Bids of both the companies are being evaluated by the resolution professional, risk and financial advisory Grant Thornton and law firm Cyril Amarchand Mangaldas.
"If public perception is a challenge because of Rewant Ruia's minority stake in Numetal, we're ready to change that," Antoine Chemali, a senior advisor at Numetal Mauritius, told PTI here this evening.
"We've already spoken to him (Rewant Ruia) and are ready to do whatever it takes us to win the Essar Steel bid.
We, the rest of the shareholders, are ready to buy out his minority stake from Numetal," he added.
But Chemali was quick to point out that Rewant does not have any say in the management of Numetal or enjoys a board representation. "He is just a minority shareholder," he said without quantifying his stake.
An Essar Group official told PTI that Rewant Ruia had resigned from the board of Essar Steel way back in 2012, and thus in no way is related to Essar Steel promoters.
It can be noted that both bidders have threatened to challenge National Company Law Tribunal and resolution professional at higher courts if their bids were rejected.
This forced government to recently hint that it's amenable to make more changes to Section 29 of the IBC to redefine "connected/related parties" to exclude only original promoters who are defaulters from bidding for an asset that has gone to the bankruptcy courts.
While Numetal has claimed that ArcellorMittal is not eligible to bid as their India joint venture Uttam Galva is a defaulter and is in NCLT now, the world's largest steel major made the same allegation against Numetal because of Rewant's investment in the SPV company.
Chemali further claimed their bid for Essar Steel has solid legal backing, saying there is nothing in the law that can make their bid ineligible.
"From the point of view of law, we are fully eligible to bid for Essar Steel and there is legally nothing that can disqualify us from bidding. That's what our lawyers have told us. We've a strong legal backing for our bid and we are fully compliant with all the laws and we will not do anything that's against the laws of the land," said Chemali.
He also said they have submitted a very good revival proposal that has three parts-streamline and maximise the production at the 9.7-million tonne plant which is running at around 60 per cent now.
"So, our bid involves an upfront cash payout which is the bid amount, and an offer to pump in as much working capital as needed to run the plant for our first priority is to optimise the capacity level in the shortest possible time.
"The second part is the equity that we will offer to the lenders and the third part of our offer is to invest more for expansion because we are very optimistic about the growth story of the steel sector in the country," explained the head of Numetal India Chandra Shekar Verma, who retired as the chairman of state-run steel major Sail.
"Shareholders of Numetal are well-versed in the steel sector apart from the infra and other key manufacturing areas and we are very serious that we get to own Essar Steel when the resolution process gets over by April 29," Chemali said.
Comments assume importance as there are reports that government is looking at further amending IBC to distinguish between promoters of defaulting firms that don't have a managerial role,from those who also manage stressed assets.
As per media reports, the corporate affairs ministry is believed to be considering two amendments to change the definition of "connected people" as per the IBC.
As of now, a promoter or investor in a defaulting company is not eligible to participate in the auction of stressed assets referred to the NCLT.
According to IBC, bids should be presented to the committee of creditors at least a month before the deadline which in the case of Essar Steel is April 29. And Chemali said they have not met the creditors but expressed the hope that they will be able to meet the deadline.