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Tata Steel, JSW Steel, 2 foreign firms show interest in Bhushan Power and Steel, Bhushan Steel

About half a dozen companies and financial institutions are interested in acquiring a stake in the loss-making and highly indebted Bhushan Power and Steel, people familiar with the development confirmed to FE. These include local steel producers Tata Steel and JSW Steel. A couple of foreign steel producers too have shown interest in picking up a stake in Bhushan Steel, bankers with direct knowledge of the developments said. One of the foreign players is believed to be Korean steel giant Posco, which has been trying to set up a plant in Odisha for several years now.

An email to the company remained unanswered till the time of going to press.

The two companies together owe banks close to Rs 95,000 crore. Insolvency proceedings were initiated against them in the National Company Law Tribunal on July 26 on the basis of pleas filed by State Bank of India and Punjab National Bank.

Bhushan Steel, a listed company, is promoted by the Singal family which holds a stake of 43.74%. It owed lenders Rs 48,152 crore as of March 2017. The firm reported a net loss of Rs 3,501 crore in 2016-17 on revenues of Rs 15,027 crore. The appointed interim resolution professional (IRP), Vijaykumar Iyer frosm Deloitte, has invited resolution plans from potential investors by December 23.

The company has an existing steel production capacity of 5.6 million tonnes per annum (mtpa) at its plants in Uttar Pradesh, Maharashtra and Odisha.

In the case of Bhushan Power and Steel, the IRP had called for qualification documents from interested parties on or before October 6. The company, which owes lenders close to Rs 47,000 crore, has an integrated steel unit at Jharsuguda in Odisha with an annual capacity of 3.5 mtpa.

In its annual report for FY14 (latest available), Bhushan Power said it had borrowed from 41 banks, including seven foreign banks. Data from Capitaline show the company reported a net loss of Rs 2,433 crore in FY16 on Rs 8,491 crore in revenues.

According to the Insolvency and Bankruptcy Code, 2016, upon admission, the board of the company is suspended and the IRP is responsible for the daily management of the company. The IRP needs to come up with a resolution plan within 180 days, extendable by another 90 days, of the admission of the petition. If the account is not resolved, the firm goes into liquidation.

Source: Financial Express

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