Profit Sheets

Essar Steel in a tight spot over 1,000 acres of unused land at Paradip

November 1, 2021 12:34 PM

Essar Steel in a tight spot over 1,000 acres of unused land at Paradip
With Essar Steel turning bankrupt and its case referred to the National Company Law Tribunal (NCLT) for insolvency resolution.

To facilitate the setting up of the steel plant, the Odisha government through its agency for land acquisition- Odisha Industrial Infrastructure Development Corporation (Idco) had acquired 1,262 acres of land, of which 1,123 acres were private and around 100 acres were government-owned.

The acquired land was alloted to Essar Steel with pointed riders. The company was to commence civil work in six months and start commercial production of steel within three years.

Idco’s letter to Essar Steel in January 2015, reviewed by Business Standard, shows the government agency alloted a parcel of 676.61 acres of acquired private land to the steel company after the latter paid Rs 116.27 crore.

The letter mandated that the land would revert to Idco free from all encumbrances should Essar Steel fail to start civil construction within six months and commence commercial steel production in three years from taking possession of land.

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Also, Essar Steel was restrained from transferring its right or title in land either partially or fully including change in the constitution of the company without prior approval of Idco.

With Essar Steel turning bankrupt and its case referred to the National Company Law Tribunal (NCLT) for insolvency resolution, the matter of unused land has stuck out like a sore thumb. ArcelorMittal’s resolution plan for Essar Steel though approved by the committee of creditors has been legally contested by its operational creditors including Standard Chartered Bank.

An Odisha government source said, “We are closely watching the insolvency resolution process of Essar Steel. After the company wriggles out of bankruptcy, the land can be transferred to the new promoters with a nominal transfer fee”.

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