Today Tata Steel Limited released a statement informing about the receipt of official communication from the RP (Resolution Professional) of Bhushan Steel Limited (‘BSL’) where it has been identified as the highest evaluated compliant resolution applicant to acquire controlling stake of BSL under the Corporate Insolvency Resolution Process (‘CIRP’) of the Insolvency and Bankruptcy Code 2016 (‘IBC’), as decided in the meeting of the Committee of Creditors (‘CoC’) of BSL on March 6, 2018.
Following the above communications, the advisors to the CoC and RP of BSL are currently in discussions with Tata Steel on the resolution plan. The next steps in the process will be as per the stipulations under the CIRP of the IBC.
Who were the bidders for Bhushan Steel?
Bhushan Steel that has integrated steelmaking capacity of 5.6 MnT was declared as an NPA (Non-performing asset) in Jun’17 by RBI (Reserve Bank of India). The company was referred to NCLT (National Company Law Tribunal) for non-repayment of loan worth INR. 570 billion.
Along with Tata Steel, world steel leader Arcelor Mittal, India’s natural resource major, Vedanta and a consortium comprising of Japanese steel major JFE, JSW Steel and Bain-Piramal made a bid for Bhushan Steel in Jan’18.
For JFE-JSW Steel, the acquisition of Bhushan Steel was important because the duo has no presence in eastern India while Bain-Piramal is a fund, seeking distressed assets and is jointly promoted by Bain Capital Credit and Piramal Enterprises.
For the Anil Agarwal-owned Vedanta, the steel industry is uncharted territory and entering steel sector would have been proved a move of forward integration.
Arcelor Mittal has been waiting since long to enter into Indian steel market through direct route and the acquisition of Bhushan Steel would have provided this opportunity to the steel major.
How did Bhsuhan Steel land into bankruptcy trouble?
About Tata Steel
Tata Steel has a total operational capacity of 13 MnT (10 MnT in Jameshdpur and 3 MnT in Kalinganagar, Odisha). It is currently undergoing a capacity expansion of Kalinganagr plant from 3 MnT to 5 MnT which is expected to be completed by 2020. Now with Bhushan Steel’s acquisition of 5.6 MnT capacity, Tata Steel’s combined capacity by 2020 is expected to reach about 24.3 MnT.
On 19 Feb’18, we have covered a detailed article about What made Tata Steel acquire Bhushan Steel?
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