Analysis on the Reorganization of Steel Companies and ArcelorMittal/Nippon Steel Corporation Alliance India

<p>This paper verifies and analyzes the background of the joint acquisition of Essar Steel India Limited（Gujarat, India）by Nippon Steel（Japan）and ArcelorMittal（Luxembourg）from the perspective of financial data and corporate management. Regarding the background of the joint acquisition, we indicate that the acquisition was carried out much more quickly than previous bankruptcy and reorganization procedures in India, resulting in less damage to the value of the steelworks that Essar Steel originally had. It is also worth noting that ArcelorMittal’s involvement and leadership were conspicuous in the joint acquisition process. Besides, we reveal the powerful involvement of the Japan Bank for International Cooperation（JBIC）in financing the joint acquisition. Conducting a financial analysis to verify the success of the joint acquisition of Essar Steel（currently ArcelorMittal Nippon Steel India（AM/NS India））is shown through financial analysis. Previous studies revealed the usefulness of supplementary information on joint ventures in the financial statement. In this regard, while ArcelorMittal’s consolidated financial statements disclose summarized financial information of AM/NS India as a material joint venture based on IFRS12, Nippon Steel’s consolidated financial statements do not. A detailed examination of the disclosure issues regarding the asymmetric judgments of these two companies shows no difference in the significance of AM/NS India for both ArcelorMittal and Nippon Steel. The notable contribution of this paper is having delved deeply into the history and intentions of the joint acquisition of Essar Steel by Nippon Steel and ArcelorMittal and shed light on the potential disclosure issues based on the accounting standards of joint ventures.</p>