Saturday, January 16, 2021

Why is ArcelorMittal Vying for the Indian Market and Bankrupt Steel Plants?

ArcelorMittal bids on Essar Steel making another attempt to make an impactful entry into the fastest growing global steel market. Why has ArcelorMittal set its eyes on the Indian market? Why do the bankrupt steel plants in the Indian market lure ArcelorMittal?

It can be said that it was easier for ArcelorMittal to sail through a 9-year plunge in the demand for steel, globally than making a successful impact on the Indian market. ArcelorMittal is undoubtedly a giant world steel producer and it comes as a little surprise that it vies the bankrupt steel plants in the Indian Market as a high potential opportunity.

ArcelorMittal Bids After Careful Evaluation

Late last year, around twenty team members from the company started the evaluation process on the 3 potential steel assets up for bid in the Indian Market. This includes Essar Steel, Bhushan Power and Steel and Bhushan Steel. These team members analysed the steel plants and evaluated books and records too.

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In 2018, February, the company bid only on Essar Steel which holds a completely integrated steel plant in Gujarat. This is also the only steel plant that is completely integrated into the West of India. The other company vying for a bid on Essar Steel is Numetal.

The Growth of Arcelor Mittal

If the company is successful in acquiring Essar Steel, it will add a little less than 10% to the existing 114-million-ton capacity of the giant steel producer. The Exec. VP of ArcelorMittal, who also carried out the valuation, stated that it is natural for companies to fall under financial crisis and that ArcelorMittal would be able to bring out the maximum potential and results with it’s hold on global markets and efficient technology skills.

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Additionally, the steel market is expected to rise significantly in developing nations. Currently China is consuming approximately 500 kgs per person, annually; however, this may significantly drop as major projects are slated to complete.

The Giant Steel Producer has made multiple attempts in the past to make an entry into the Indian market and believes that this bid is going to make that change. Although the exact bid amounts have not been disclosed, it is expected that ArcelorMittal will be taking on a debt to finance the project.

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