India’s Gujarat state government is likely to lose around Rs 11.5 billion (£121.14 million) if country’s National Company Law Tribunal (NCLT) upholds the committee of creditors recommendation to move ahead with ArcelorMittal’s resolution plan to acquire debt-ridden Indian firm Essar Steel, said a Mint report.
These dues are categorised as operational creditors and ArcelorMittal’s proposal doesn’t facilitate or make any provision for the payment to such creditors, the report in the financial daily said.
The steel firm, Essar Steel owes around Rs 11.5bn to many Gujarat state government firms including Rs 8.72bn to Gujarat Energy Transmission Corporation.
According to the details obtained from the resolution plan, the dues pertain to various government agencies of the Gujarat state such as the electricity department, sales tax department, local authorities, and others.
According to the resolution plan submitted for the acquisition of Essar Steel, the plan proposes an upfront payment of Rs 420bn to the lenders.
In addition to it, the plan proposes Rs 80bn towards capital expenditure. The total admitted claims of operational creditors is around Rs 49.95bn. ArcelorMittal has offered to settle it at Rs2.14 bn.
Meanwhile, Gujarat government officer said the concerned are aware of the issues and will soon decide on the necessary steps required to be taken.