All-clear for Vedanta to acquire Electrosteel
13 August 2018
The National Company Law Appellate Tribunal (NCLAT) ruled that Anil Agarwal-controlled Vedanta is eligible to acquire the stressed ElectroSteel dismissing an appeal from Renaissance Steel that challenged the sale award under corporate insolvency and bankruptcy proceedings.
Electrosteel failed to repay more than Rs 13,000 crore bank loans.
“We are not inclined to interfere with the impugned order….passed in the case of the ElectroSteel India, which are under challenge in the company appeal…,” said S J Mukhopadhaya and Bansi Lal Bhat, two member judges in the order. “They are, accordingly, dismissed.
The National Company Law Tribunal had In April approved Vedanta’s resolution plan for Electrosteel SteelsNSE 4.96 %, making it the first among a dozen large stressed accounts the RBI directed to be put on a fast-paced resolution process under the Insolvency and Bankruptcy Code.
The resolution plan entailed a Rs 5,300 crore cash payout with a 60 per cent loan loss for lenders.
Last year, lead lender State Bank of India filed an insolvency petition in Kolkata, which was admitted in in July 2017. The NCLT’s Kolkata chapter approved Vedanta’s bid to acquire Electrosteel Steels.
The appellate tribunal turned down the objection by Renaissance Steel India that argued Vedanta was ineligible to bid as one of its affiliates was found guilty in Zambia of environmental regulations violation.
Renaissance approached NCLAT against the order of the NCLT. While the appellate tribunal didn’t stop the process, allowing Vedanta to deposit Rs 5,320 crore to own Electrosteel Steels, the tribunal also declined to stay the delisting of Electrosteel Steels initiated by Vedanta.