Tata Steel interested to bid for Essar Steel
India’s second-largest private steelmaker, Tata Steel, has expressed interest in bidding for debt-ridden Essar Steel, whose lenders have filed for revival of the company under the Insolvency and Bankruptcy Code.
Essar Steel, which operates a 10 million tonnes per annum (MTPA) facility in Gujarat, is facing insolvency proceedings after it failed to service debt. Tata Steel is currently undertaking projects to raise capacity to 18 MTPA from 13 MTPA now. If the steelmaker acquires Essar Steel, it would take Tata Steel’s capacity to 28 MTPA, well past JSW’s 18 MT.
Tata Steel had earlier openly expressed its intention to grow the business, both by expanding capacity and by acquiring financially stressed companies, as it bets on government spending to build affordable homes and infrastructure projects, besides the decision to allow Indian companies to participate in defense projects and development of ports and railways.
Acquiring Essar Steel will give Tata Steel easier access to the market in west India, as all its domestic production capacity is situated in the eastern part of the country where it has iron ore and coal mines.