JSW, Piramal-Bain may bid as one for Bhushan Power

Sajjan Jindal-controlled JSW Steel is likely to partner Piramal-Bain fund in an effort to make a joint bid for the unlisted Bhushan Power and Steel, currently undergoing insolvency.

An e-mail to JSW officials remained unanswered, and a Piramal group spokesperson didn't respond to messages. 

JSW Steel is among the six companies selected from the EoI submission stage. Others selected are: Tata Steel, Vedanta, AION Capital, an investor from the UAE and Bhushan Power & Steel’s promoter Sanjay Singal.

Mahender Kumar Khandelwal, insolvency professional for Bhushan Power, and leader and partner of business restructuring at BDO India LLP, declined to comment on the selection process for the firms but cited some delay in the past due to non-finalisation of evaluation criteria by lenders. "Lenders have now finalised the criteria to be placed for voting at the next meeting," he said.

Though Piramal-Bain fund has not submitted an EoI, sources close to the development said, it could tie up with JSW Steel at the bidding stage. The EoI process is over for Bhushan Power & Steel, with the information memorandum having circulated among lenders. Bids, however, are yet to be invited.

Bhushan Power & Steel has a steel-making capacity of three million tonnes per year across Odisha, West Bengal and Chandigarh. A hot-rolled steel facility stands in Odisha and cold-rolling facilities in Kolkata and Chandigarh. Bhushan also has a captive power plant, a pellet plant and an iron-ore beneficiation plant.

JSW Steel, which has a strong presence in the west and south, has decided to focus on the east as far as bidding for stressed assets go. It has submitted EoIs for Bhushan Power & Steel and Monnet Ispat & Energy and is expected to bid for Bhushan Steel as well. The last date for submitting insolvency resolution plans for Bhushan Steel is December 23.

JSW, currently, India's largest steelmaker, is looking to widen the gap with its competitors. At present, JSW Steel boasts an annual capacity of 18 million tonnes. Steel Authority of India Ltd (SAIL), with a capacity of 17.5 million tonnes per year, snaps on its heels. Tata Steel has a yearly capacity of 12.7 million tonnes.

JSW has already lined up a brownfield expansion to boost yearly capacity to 23 million tonnes by 2020. In order to jump to 40 million tonnes by 2030, the firm plans snapping up others besides organically increasing its capacity.

Industry sources said JSW's objective was to outrun competitors by several miles.

In the near term, its rival SAIL plans a ramp-up to 21.3 million tonnes yearly capacity, riding modernisation and expansion programmes.

Tata Steel, however, is on a major expansion drive in India, aiming to double capacity in the next five years.

Besides planning to take up the second phase of Kalinganagar soon, the firm is expected to submit EoIs for all the five stressed steel assets undergoing insolvency, not just Essar Steel and Electrosteel Steels, but also the companies JSW Steel is eyeing.