March 21, 2018

India's Tata Steel emerges as top bidder for Bhushan Steel

09 March 2018, 05:30 | Lena Norman

L&T moves NCLT to be declared as secured creditor in Bhushan Steel insolvency

L&T moves tribunal to recover ₹900 crore from Bhushan Steel

Salt-to-software conglomerate Tata Group's steel business and India's biggest domestic steelmaker JSW Steel Ltd were the two primary industry bidders for the acquisition of Bhushan Steel. Reacting to the news, Bhushan Steel's share price had spiked 12 percent since closing price yesterday, but is now headed downward again. It also supplies steel for producing consumer goods such as refrigerators and washing machines.

Sale of debt-laden Bhushan Steel, which is one of the largest non-performing assets in the country, is credit positive as it will help improve banks' asset quality metrics and set precedent for resolution of other non-performing assets, particularly in the steel sector, Moody's Investors Service said on Friday.

Tata's access to iron ore mines also puts it in a much better position to turn around Bhushan Steel's unit.

India, which did not have a formal bankruptcy process until mid-2016, has seen a surge in bankruptcy cases since past year, with over 500 companies now facing bankruptcy court proceedings.

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A three-member bench presided by chairperson M.M Kumar directed Vijaykumar V. Iyer, Bhushan Steel's Insolvency Resolution Professional to reply to L&T's plea within a week. Tata Steel has offered to pay Bhushan Steel's financial creditor ₹35,200 crore, while operational creditors will get ₹1,200 crore.

The Reserve Bank of India, the central bank, has asked banks to provide a minimum of 50% of their respective loan amount for the account by March 2018.

"We expect most rated Indian banks to have some exposure to Bhushan Steel and the resolution will particularly benefit State Bank of India the leader of the consortium of lenders to Bhushan Steel", Moody's said.

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