Electrosteel goes to Vedanta; first success from RBI's 'dirty dozen' list

Nearly a year after the Reserve Bank of India sent out the first list of companies for insolvency proceedings, the banks have finally got a reason to smile, a haircut of 55 per cent notwithstanding.

Electrosteel Steels has become the first of the 12 companies from the list to get a green signal from the National Company Law Tribunal (NCLT) on its resolution plan. The NCLT on Tuesday approved the resolution plan presented by Vedanta Resources.

"We have got our first success. NCLT has approved the resolution plan submitted by Vedanta Ltd. for Electrosteel Steels…We are quite happy with this," an executive from the banking sector told Moneycontrol.

Vedanta Ltd will now have to get the CCI (Competition Commission of India) approval, which they had applied about 10 days back. The approval should be through quickly in the next 2-3 weeks.

Bankers will be receiving the order in the next couple of days.

A few days back, the Insolvency resolution professional was fined 1/10th of the fees for neglecting the claims of the operational creditors.

The resolution plan was earlier cleared by the Committee of Creditors, consisting of Electrosteel's lenders.

The company was referred to the NCLT after accumulating Rs 13,000 crore in debts, including interests. State Bank of India had the highest exposure, at Rs 5,000 crore.

In January, Vedanta Resources had emerged as the highest bidder for the stressed company, beating competition from Tata Steel and Renaissance Steel India Ltd. The Anil Agarwal-led company had bid about Rs 4,500 crore.

RBI's first list, called the dirty dozen, also includes Essar Steel, Monnet Ispat, Bhushan Steel and Bhushan Steel & Power.