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Last Trade - 25/09/20

Sector
Basic Materials
Size
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Market Cap £237.3m
Enterprise Value £1.91bn
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ArcelorMittal's focus on other assets may hit $1 bln Indian JV

Tue 26th September, 2017 12:30pm
* SAIL objects to ArcelorMittal's interest in other firms 
    * ArcelorMittal looking at Bhushan, Essar Steel - sources 
    * ArcelorMittal-SAIL dispute non-compete, exit clauses 
 
    By Neha Dasgupta 
    NEW DELHI, Sept 26 (Reuters) - ArcelorMittal's  MT.AS  
interest in buying debt-ridden Indian steel companies could 
derail its planned $1 billion joint venture with Steel Authority 
of India Ltd  SAIL.NS  (SAIL), a steel ministry report showed. 
    State-owned SAIL said any such buyout by the world's top 
steelmaker, controlled by billionaire Lakshmi Mittal, could 
violate its exclusive partnership arrangement for manufacturing 
steel for cars, the document seen by Reuters showed. 
    ArcelorMittal and SAIL signed their preliminary agreement in 
2015 but there has been little progress due to disputes over 
terms. Earlier this month, the steel ministry drafted a status 
report for Prime Minister Narendra Modi's office which shows the 
two are nowhere near close to ironing out their differences.   
    "ArcelorMittal's stance has undergone significant change 
during July-August 2017 and that ArcelorMittal has opened up 
some of the previously agreed issues," the report said, citing 
SAIL's objections at a meeting last month. 
    India, the world's fastest growing steel market, is banking 
on the partnership to cut imports of auto-grade steel, which 
mostly come from Japan and South Korea.    
    ArcelorMittal, however, has been scrutinising debt-ridden 
Bhushan Steel Ltd  BSSL.NS  and Essar Steel for a possible 
buyout, according to two sources familiar with the matter. 
    The Luxembourg-based company, known for turning around 
troubled steel assets, is looking for a foothold in India. 
    SAIL, which has been in the red for nine straight quarters, 
hopes the joint venture will allow it to compete with local 
rivals such as JSW Steel  JSTL.NS  and Tata Steel  TISC.NS . 
    ArcelorMittal and SAIL did not respond to requests for 
comment.   
    SAIL has argued that ArcelorMittal's stance over non-compete 
and exit clauses has further stalled discussions. 
    India's think-tank NITI Aayog, chaired by Modi, which has 
been mediating talks over the delayed venture, proposed an exit 
clause of more than 10 years, with the firm choosing to leave 
giving the right of first refusal to the other company. 
 urn:newsml:reuters.com:*:nL3N1IX2F2 
    Both companies are negotiating to extend the preliminary 
agreement by six months after the first three-month extension 
lapsed on Aug. 21, the document showed.  
    The two companies have also not finalised a location for 
their plant and have been in talks with the state governments of 
Andhra Pradesh, Gujarat and Maharashtra.         
    Bhushan and Essar Steel are among 12 of the country's top 
loan defaulters that lenders have taken to bankruptcy court.  
   ($1 = 65.2950 Indian rupees) 
 
 (Reporting by Neha Dasgupta; additional reporting by Promit 
Mukherjee; editing by David Clarke) 
 ((neha.dasgupta@tr.com; +91-11-49548058; Reuters Messaging: 
neha.dasgupta.thomsonreuters.com@reuters.net)) 
 
Keywords: INDIA ARCELORMITTAL/SAIL
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