ArcelorMittal SA, the world's biggest steelmaker, has bid 48 billion rupees ($673 million) to acquire Essar's 1200 megawatt power plant in central India, one of the most prized assets in the debt-ridden group's power portfolio.
The bid for the power plant once again pits ArcelorMittal chief Lakshmi Mittal against the Ruia family, who are already fighting to prevent their flagship steel asset from falling into the hands of the global steel giant.
Essar's creditors are selling many of the group's assets to recover billions of dollars of loans, leaving Essar Group with little say over who buys the assets.
Government-owned Power Finance Corp Ltd (PFC) is the lead creditor of the power plant and PFC's Chairman Rajeev Sharma disclosed ArcelorMittal's bid on Monday.
He said that the Essar family had also made a 35 billion rupee bid for the power plant, but ArcelorMittal's bid was 37 per cent higher.
"Now we have received an offer from ArcelorMittal at 4 crore per megawatt, so 4,800 crore rupees (48 billion rupees)," Sharma told a press conference.
Sharma said PFC has yet to decide on either offer for the asset, known as the Mahan power plant, which has debt worth 74 billion rupees.
ArcelorMittal declined to comment on the matter and Essar was not immediately available for comment.
If the steel giant manages to clinch the deal for the Mahan plant, it would be yet another blow to the Ruia family's attempt to renegotiate debt settlements and retain control of their assets.
ArcelorMittal has already been picked as the preferred bidder for Essar Group's flagship 10 million tonne steel plant in Gujarat and is also the sole bidder for Essar's infrastructure arm EPC Constructions, formerly called Essar Projects.
The Ruias and ArcelorMittal are still locked in a legal wrangle over the fate of the steel asset. A final court decision in that matter is expected soon.
Essar Power, a subsidiary of the Essar Group, spent 80 billion rupees to build the plant, which began operation early last year and currently accounts for 50 per cent of Essar Group's power generation.
($1 = 71.3800 Indian rupees)