Sesa Goa, India’s largest producer and exporter of iron ore in the private sector and a part of the Vedanta group, is seeking legal opinion on its failed bid for Bellary Steel & Alloys.
“We are seeking legal opinion, but have not decided whether to move court. That will depend on whether Bellary is worth the fight,” a Sesa Goa official said.
JSW Steel emerged as the highest bidder for Bellary Steel at Rs 210 crore. A JSW spokesperson said, “We have no comments as of now.”
Bellary Steel shares today closed 20 per cent higher at Rs 2.94 on the Bombay Stock Exchange.
While confirming that JSW was the top bidder, IFCI said the standard procedure had been followed for the asset sale. Bellary is being sold by a consortium of lenders led by IFCI.
“As a lender, our aim is to maximize value,” said a top IFCI official, adding that Sesa Goa had been offered to participate in inter-se bidding, but they were reluctant.
“All the standard procedures have been followed in the bid process. We gave the option to the two bidders to bid among themselves. However, Sesa Goa was reluctant. We would talk to the concerned party to present our point of view. But all the bidders do not succeed, and they have the right to be disappointed,” said another top IFCI official.
A clause in the tender said inter se bidding would be held among those found eligible and the highest bidder would be declared successful.
According to Sesa Goa, on December 31, the company was declared the only qualified bidder at Rs 206 crore. But by afternoon, when Sesa Goa officials went to collect the letter, they were informed about a higher bid from JSW Steel. Companies were allowed to bid separately for the land, integrated steel plant and machinery. However, Sesa Goa and JSW gave composite bids.
The sale was conducted under the Securitisation & Reconstruction of Financial Assets & Enforcement of Security Interest Act. The Act empowers banks or financial institutions to recover non-performing assets without court intervention.
Bellary Steel has a half-constructed plant, with a rated capacity of 0.5 million tonne. The plant was never completed and ran into debt, but its biggest asset is 700 acres of freehold land. JSW’s bid for Bellary came soon after bagging Ispat Industries, also debt-laden. JSW’s seven-million tonne steel plant is in the Bellary-Hospet region.
With Ispat, JSW will become India’s largest steel maker by March 2011, when its Vijayanagar plant commissions an additional three million tonne, taking its total capacity to 14.3 million tonnes. The company has set itself an ambitious target of 34 million tonnes by 2020.
In associate with Ishita Ayan Dutt & Surajeet Dasgupta
