JSW bids Rs 25,000 cr for Bhushan Steel

JSW wants to absorb Bhushan Steel's Rs 45,000 cr debts at huge discount, seeks management change

The Sajjan Jindal-led JSW Steel has submitted a bid of Rs 25,000 crore to banks for the debt-laden Bhushan Steel. 

Sources close to the development indicated the deal would include taking over the debts of Bhushan Steel, which were Rs 44,477.90 crore in 2015-16, at a substantial discount. However, the Bhushan Steel management is not on board with the deal and JSW Steel is dealing with the lenders directly. 

Bhushan Steel’s market capitalisation was Rs 1,202.79 crore at the close of trade on Tuesday. An e-mail to JSW Steel went unanswered. Text messages and calls to Bhushan Steel also did not draw any response. JSW Steel informed stock exchanges on Monday in response to reports that the company had bid for Bhushan Steel. JSW Steel wants to double its steel-making capacity to 40 million tonnes in the next decade and it will use organic and inorganic growth to achieve this target. 

Bhushan Steel, on the other hand, told exchanges it had not called for any bids from JSW Steel or any other buyer.

A forensic audit of Bhushan Steel is now complete and a techno-economic viability study is under way. Banks may decide on invoking strategic debt restructuring or sustainable structuring of stressed assets in the Bhushan Steel case.

Bhushan Steel ran up big debts to speed up its growth. It commissioned 0.3 million tonnes in 2008-09, two million tonnes in 2009-2010 and 5.2 million tonnes in 2014. 

In 2013, the Odisha State Pollution Control Board directed Bhushan Steel to shut its blast furnace after an explosion during the trial run killed two workers and injured 16 others. Bhushan Steel’s debt mounted from Rs 39,078.70 crore in 2014-15 to Rs 44,477.90 crore in 2015-16. Losses widened from Rs 1,256.80 crore to Rs 2,911.40 crore over the same period. 

Sources said JSW Steel was looking at a change of management in Bhushan Steel. JSW Steel is also a front runner for buying Monnet Ispat Energy.