Flexing muscles! New game set to begin in Indian steel market - ArcelorMittal to heat up competition
Delivering a big verdict, the Supreme Court has allowed ArcelorMittal to make payment for Essar Steel India, paving the way for acquisition of the bankrupt steel maker by the Luxembourg-headquartered entity. The acquisition is being touted as the country's first fire sale to have witnessed fierce fight for control between rival entities. A new game is set to begin in the Indian steel sector with ArcelorMittal, the world's largest steel company, all set to take over the assets of Essar Steel.
Indian steel market: ArcelorMittal to heat up competition
Steel sector analysts agreed that ArcelorMittal's might could heat up competition in the Indian market and result in the introduction of a new category of value added product segment that till now is either being imported or is available in lesser quantity in the country. The action may also shift to auto grade steel where other steel makers such as Tata Steel and JSW are fighting fiercely for market share.
"Acquisition of Essar Steel presents a good opportunity for ArcelorMittal to have a foothold in the Indian market. But to realise full potential from Essar Steel, the company would need to first invest and build synergies around its global operations, so that cost could be brought down and products are made competitive. Also, demand conditions would play an important role in the growth of steel operations post the entry of ArcelorMittal in the Indian market," said steel market investment and market strategist A.S. Firoz, as per an IANS report.
ArcelorMittal's bid amount of Rs 42,000 crore emerged successful as it was much higher than the other bidder, Vedanta, and would help the lenders realise about 85 per cent of their total debt exposure of close to Rs 49,000 crore.
ArcelorMittal to turn around the stressed asset of Essar Steel
ArcelorMittal has indicated that it will not only turn around the stressed asset of Essar Steel, but will also explore setting up a new steel plant close to the company's current pellet unit at Paradip in Odisha. The capacity of the steel plant in Gujarat may also be ramped up to full scale of 10 million tonnes (mt) and further to 15 mt.
Moreover, sources said that ArcelorMittal is bidding with Nippon Steel for Essar. This would help the two to use their global approval for auto grade steel to source steel from Essar Steel India after the restructuring. It will provide a greater number of ready-made customers to Essar Steel.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
02:58 PM IST