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Essar Steel: Mittals seek immunity from probes

Worries stem from BPSL case, where ED attached assets of the company after it was taken over by JSW Steel.

, ET Bureau|
Updated: Dec 04, 2019, 08.35 AM IST
ArcelorMittal wants legal clarity from the government before it transfers money into the escrow account.
MUMBAI: Steel tycoon Lakshmi Mittal’s ArcelorMittal has approached the government seeking immunity from likely future investigations pertaining to Essar Steel and its erstwhile promoters, the Ruia family, four people familiar with the matter told ET.

Mittal wants to avoid a recurrence of any controversy akin to the one involving Bhushan Power and Steel (BPSL), when the Enforcement Directorate attached the firm’s assets after it was acquired by JSW Steel from the National Company Law Tribunal.

ArcelorMittal has told government officials and ministers that any future or ongoing probe into past dealings of the Ruia family should not impact the assets of Essar Steel. The steel giant has reached out to the home, finance, law and defence ministries, according to one of the persons. “ArcelorMittal has held talks with several ministers and civil servants, and has received a positive reply,” said a person aware of the developments.

“It has been a long battle for the Mittals, and this is their way of preventing future troubles after they transfer money to the banks. ArcelorMittal is very clear it doesn’t want any ambiguity around any present or future liabilities,” the person said.

ArcelorMittal declined to comment. Questionnaires sent to the four ministries did not elicit a response till press time Tuesday.


Essar Steel was admitted to the bankruptcy court in June 2017 and several bidders showed interest, including ArcelorMittal, which finally bagged the asset after numerous legal and procedural twists and turns. ArcelorMittal wants legal clarity from the government before it transfers money into the escrow account.

“Banks are yet to receive the money, but they are hopeful it will come in before the end of the month, which will help bump up their December quarter earnings,” another person, requesting anonymity.

Mittal’s worries stem from the BPSL case, where the ED attached assets of the company after it was taken over by JSW Steel. The agency was investigating the Singal family, the former promoters of BPSL, on charges of money laundering.

In October, the National Company Law Appellate Tribunal (NCLAT) came down heavily on the ED and directed it to release BPSL’s assets. “You are going to kill the economy of the country... (You are) playing with fire,” the NCLAT bench headed by Justice SJ Mukhopadhaya told the agency. “No outsider will come and purchase (distressed companies)... IBC (Insolvency and Bankruptcy Code) cannot be annulled in this manner. Money laundering is by an individual,” it said.

The Supreme Court last month reinforced the supremacy of the committee of creditors and financial lenders in deciding the payment schedule for creditors in bankruptcy cases, clearing the decks for ArcelorMittal’s purchase of Essar Steel.

Lenders will recover almost 92% of the Rs 54,500-crore owed to them by Essar Steel. Operational creditors will receive Rs 1,196 crore. Banks, which have made provisions of 50-100% for Essar Steel, will not only be able to improve provision coverage ratios but also consider write-backs that will boost profits.
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