Will Ruias challenge insolvency proceedings if Numetal gets disqualified?

After six months long painstaking insolvency proceedings and due diligences, the Rs 43,000 crore debtor Essar Steel has received just two bids--- from ArcelorMittal and Numetal Mauritius--- on Monday. Though ArcelorMittal did due diligence for Bhushan and Essar, it reserved its final bid for the latter, pushing the industry to guess that it's a sizable offer. The bid of Numetal is going to be the game changer as it is the last attempt of the Ruia family, the promoters of Essar group companies, to win back their flagship company.

Numetal is a consortium, fronting the interests of Ruias, in which Russian bank VTB holds the majority stake. Rewant Ruia, the son of co-founder Ravi Ruia, holds a minority stake in the consortium. The bids will open on Wednesday. But announcing just the name of the lead bidder will not be the end of this corporate drama. There's expected to be a lot of twists and turns in the battle for Essar Steel.

Will Numetal qualify for the bid?

The Section 29A of Insolvency and Bankruptcy Code (IBC)--- the new section was introduced by the government as an amendment--- debars the promoters, who haven't paid their overdues to the lenders, from submitting the resolution plan. Some legal experts say that there are grey areas in defining the terms "related party" and "person acting in concert" in the IBC and Companies Act. Can Rewant be restricted from bid, considering him under any of these?

According to sources, Numetal may challenge the insolvency proceedings legally if the bid is rejected. Essar spokesperson replied to BT query that "Essar is not bidding. Numetal is bidding and Rewant only has a minority interest. Whatever is being done is within the law and under legal advise."

The Ruias had in June last year challenged the lenders' decision to refer Essar Steel to NCLT for insolvency proceedings. The steelmaker was among the 12 stressed assets with large debts that the Reserve Bank of India (RBI) had initially picked for resolution under the IBC. The promoters argued in the court that they had never been referred as wilful defaulters or accused for diverting funds, perpetrating fraud and indulging in malfeasance.

Will ArcelorMittal kick off its India streak?

The cancelation of the bid of Numetal will help the job of ArcelorMittal easier in India. Industry experts expect that the bid of Numetal would be in the range of Rs 40,000 crore. The preparedness of ArcelorMittal shows that they would also quote the price in the same range.

Why is there no other bidder?

The surprise in the insolvency proceedings was the lesser number of bids, even for large assets like Essar and Bhushan Steel. India's oldest steelmaker Tata Steel did the due diligence for at least four major steel assets, but ended up as the second largest bidder in three stressed assets--- Bhushan Steel, Bhushan Power and Steel and Electrosteel Steels. They didn't submit the bid for Essar. It came second after Vedanta of Anil Agarwal in the bid for Electrosteel. Sajjan Jinda's JSW Steel has emerged as the lead bidder for Monnet Ispat and both the Bhushan companies.

Vedanta was one of the potential bidders for the Essar and Bhushan companies, but they refrained from putting in the bid. Foreign players Nippon Steel and Posco were also there in the initial phase.

Is it the fear of losing the bid that's forced the large players from backing out of the bid process? "There would be many other reasons, including going against the interest of rival corporate houses," says an expert in the market.  More will unfold in the days to come.