Vedanta on Monday said it has deposited an upfront amount of Rs 5,320 crore in the escrow account of Electrosteel Steels (ESL) to hold 90% of the paid-up capital of the insolvent company. The move follows the National Company Law Appellate Tribunal’s (NCLAT) permission that it can make the upfront payment to lenders for its proposed acquisition of the debt-laden steelmaker.
In a stock exchange filing, Vedanta said, “The consideration is in the form of cash which has been deposited in an escrow account and thereby management control of ESL has been taken by the company.” The company, in the filing, said it has already initiated implementation of the resolution plan for ESL, which has manufacturing facilities near Bokaro in Jharkhand.
“The acquisition will complement Vedanta’s existing iron ore business as the vertical integration of steel manufacturing capabilities has the potential to generate efficiencies,” the company said, adding that the insolvent steelmaker’s manufacturing capacity could be increased to 2.5 million tones per annul (MTPA) from current 1.5 MTPA.
The Anil Agarwal promoted company has got approvals from the National Company Law Tribunal (NCLT) and the Competition Commission of India (CCI) to acquire the company, which had posted a
total income of Rs 2,867.83 crore in FY17.
On last Wednesday the NCLAT said any resolution of Electrosteel Steels will be subject to its final order in the case where Renaissance Steel India (RSIPL)— another bidder for Electrosteel — has challenged Vedanta’s bid. The NCLAT added Electrosteel’s lenders would refund the money to Vedanta if the final order goes against it. The NCLAT had, on May 17, admitted RSIPL’s petition challenging Vedanta’s eligibility.
