Vedanta To Sell Electrosteel Steels Limited 4 Years After Acquisition
November 16, 2022: The Vedanta Group, led by businessman Anil Agarwal, took control of Electrosteel Steels Ltd (ESL) in the summer of 2018 after the company’s creditors took it into insolvency proceedings.
ESL became the second steel company to file for bankruptcy after Tata Steel’s takeover of Bhushan Steel in April of the same year. In 2018, Electrosteel Steels Limited (ESL) received Rs. Four years after it piped up Tata Steel to acquire it for Rs 5,320 crore, the Vedanta group led by businessman Anil Agarwal is now selling the business and looking for buyers.
The group wants to sell ESL to focus on its core mining and industrial businesses and also deleverage a balance sheet that had $11.7 billion in debt at the end of March.
Vedanta Group has reached out to steel companies like ArcelorMittal Nippon Steel (AMNS), Tata Steel, JSW and Jindal Steel & Power Ltd and a select group of financial investors for it.
Moreover, top executives such as ArcelorMittal CEO Aditya Mittal have also visited the site along with Vedanta officials in recent weeks, people with knowledge of the development told The Economic Times.
Vedanta Group said it did not want to comment on market speculation. On the other hand, Tata Steel CFO Kaushik Chatterjee said, “We currently have no acquisitions under evaluation.”
Vedanta took control of Electrosteel in the summer of 2018 after the loss-making company’s creditors took it into insolvency proceedings. ESL became the second steel company to file for bankruptcy after Tata Steel’s acquisition of Bhushan Steel in April 2018.
While it is now looking to sell the business, Vedanta said four years ago that the acquisition would complement its existing iron ore business as vertical integration of steelmaking capabilities has the potential to generate significant efficiencies.
Electrosteel Steels was a subsidiary of Electrosteel Castings. After taking over, Vedanta delisted the company. In 2018, ESL had a planned steelmaking capacity of 2.51 million tonnes and an ongoing capacity of 1.5 million tonnes in 2018.
It has seen massive expansion under Vedanta in Bokaro and Goa and a greenfield unit in Karnataka’s Bellary. Agarwal’s Vedanta has doubled the ask price and is now trading at Rs. Looking at a valuation of 10,500-12,000 crores.
The premium is expected to be a potential deal breaker, people in the know told ET. “Several times, many players have approached Agarwal for Electrosteel but he has never openly admitted that he is the seller. Tensions are rising again.
Electrosteel also has environmental issues which it has promised to resolve before the transaction is completed but the question is too much when we are seeing a squeeze in the credit market,” said an industry veteran.
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