On March 8, the Indian Corporate Law Court (NCLT) approved ArcelorMittal to acquire Essar Steel in India. According to ArcelorMittal’s previously published annual report, it will implement a capital expenditure plan of approximately 186.97 billion rupees (approximately $2.634 billion) within six years, aiming to increase the annual production capacity of Essar Steel in India by 2024. To 8.5 million tons.

The capital expenditure plan is divided into two phases. The first phase is dedicated to completing infrastructure construction projects, increasing the annual production capacity of Essar Steel to 6.5 million tons; the second phase is dedicated to asset restructuring, adding coke ovens and blast furnaces, and increasing annual production capacity to 8.5 million tons.

ArcelorMittal revealed that its long-term goal is to expand the steel production capacity of Essar Steel to 12 million tons to 15 million tons.

It is understood that in order to solve the debt problem of Essar Steel, ArcelorMittal has provided it with about 410 billion rupees (about 5.916 billion US dollars) and further injected it with about 800 million rupees (about 11.27 US$100 million) to support its increased production levels and optimized product mix.

In October 2018, the Essar Steel Creditors Committee of India voted to pass ArcelorMittal's plan and issued a letter of intent. On November 20, 2018, ArcelorMittal and several banks reached a $7 billion agreement on the acquisition of Essar Steel. The agreement has a term of one year (ie as of November 20, 2019), but ArcelorMittal can choose to extend the period by six months. ArcelorMittal said in its annual report that it might use the funds to pay for certain amounts in the capital expenditure plan. However, if the capital expenditure plan is implemented, the company will face some risks.

On the financial side, ArcelorMittal will face uncertainty related to risk exposure. In terms of operations, although ArcelorMittal has extensive experience in turning losses, this is the first large-scale acquisition in India in emerging markets. It cannot be ruled out that capital expenditures exceed budgetary quotas and it is difficult to achieve business goals.