Tata Steel emerges highest bidder for Bhushan Steel

Sanjeev Sharma

Tribune News Service

New Delhi, March 7

In one of the first big cases of resolution under the bankruptcy law, Tata Steel has emerged as the biggest bidder for Bhushan Steel Limited (BSL).

Tata Steel said it has received a formal communication from the Resolution Professional of Bhushan Steel Limited that it has been identified as the highest evaluated compliant resolution applicant to acquire controlling stake of BSL. This will be the largest acquisition that the Tata Group has ever made in the form of Rs 36,000-crore bid.

Though it is yet to be officially announced, Chandrasekaran’s biggest gambit as he proceeds to turn around the Tata Group would be the now almost certain acquisition of the crippled Bhushan Steel by Tata Steel for Rs 36,000 crore.

This process is taking place under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code 2016 (IBC), and was decided in the meeting of the Committee of Creditors (CoC) of BSL on March 6.

Following the communications, the advisers to the CoC and Resolution Professional 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.

In a recent report, Crisil had pointed out that resolution of stressed assets loans is critical for economic growth. It had said that it is particularly positive about the steel sector, where four large accounts have aggregate debt of Rs 1.3 lakh crore, given strong prices and uptick in domestic demand.

“Quick resolution of some large stressed assets is critical to establish the credentials of the new process, boost confidence of bankers and help kick-start the recovery process on a wider scale”, Crisil said.

According to the report, four steel NPAs are worth Rs 1.3 lakh crore, accounting for over a third of the top 50 stressed assets with an aggregate bank debt worth Rs 4 lakh crore. However, how much cash will return to banks from this is not yet clear.

The asset quality issues plaguing the public sector banks have reached such gargantuan proportions — with gross NPAs touching 10.5% — that no meaningful and sustainable economic recovery is plausible without, at least, beginning of a resolution process.

“While haircuts are likely to be deep – at 60%+ in our view in many large cases — the scale and time frame of recovery will mark a watershed for Indian banking,” the report said.