JSW Steel has emerged as the highest bidder for stressed Bhushan Power and Steel (BPSL) in the second round of bidding leaving behind Tata Steel and Liberty House. JSW’s revised offer stands at INR 19,500 crore against its earlier offer of INR 11,000 crore whereas Tata Steel and Liberty House kept their offers unchanged at INR 17,000 crore and INR 18,000 crore respectively.
Tata Steel had emerged as the highest bidder for BPSL in the first round of bidding. However, on 27 Jul’18, NCLAT (National Company Law Appellate Tribunal) directed Bhushan Power’s Committee of Creditors (CoC) to go for rebids after the other firms expressed wish to increase their offers.
According to the latest reports, as the next step of this process, the bids will be evaluated by process advisors and lenders will submit their observation to the NCLAT on August 16. The next date of hearing in NCLAT is August 17. Tata Steel had challenged the rebid in the NCLAT and the Supreme Court (SC). However, the apex court refused to stay the NCLAT order.
Tata Steel wanted to acquire BPSL as the former already has its own iron ore mines in states including Odisha, thus making it low-cost steel producer in India. These mines would have provided raw material to BPSL thus saving on the raw material costs and generating profits from BPSL’s assets.
However, if JSW Steel finally wins BPSL, it would give the company a toehold in the east. Bhushan Power has a 3 MnT of steelmaking capacity, which JSW believes can be ramped up to 5.5 MnT at a nominal cost. Industry sources said JSW made an aggressive bid for Bhushan Power to retain its leadership position in the domestic market.
JSW Steel’s current capacity is around 18 MnT. It recently acquired Monnet Ispat & Energy, which has a capacity of 1 MnT, with AION, under the Insolvency and Bankruptcy Code (IBC) proceedings. However, JSW Steel position as country’s largest private sector steel producer was in danger as Tata Steel has already acquired Bhushan Steel, an asset that was contested by the two steelmakers. Tata Steel’s capacity increased to 18.5 MnT after acquiring Bhushan Steel (with a capacity of 5.5 MnT) under IBC (Insolvency and Bankruptcy Code).
However, with the buyout of Bhushan Power, JSW Steel will retain its position as the country’s largest private sector steel producer with a capacity of 22 MnT per annum while Tata Steel, with a capacity of 19 MnT per annum, will remain the second largest.
BPSL featured among the 12 accounts recommended by RBI’s (Reserve Bank of India) internal advisory committee for resolution under the Insolvency and Bankruptcy Code (IBC) in June last year. The company’s debt stood at INR 372 billion in 2015-16. Net sales were at INR 77 billion and losses at INR 24.36 billion. And the dues have now risen to INR 470 billion.
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