Tatas, 2 others in race for Bellary

Tata Steel, JSW Steel and Bhushan Steel & Strips are in advanced stage of separate negotiations to buy the ailing Bellary Steels & Alloys' integrated steel plant.

The three steel firms have separately completed due diligence of the Bellary plant, an industry official associated with the development said.

Last year, they had sent separate expressions of interest to Asset Reconstruction Co of India, which acquired Bellary's debt. The Karnataka-based Bellary Steel makes long products and has a 500,000 tonne production capacity.

Bellary Steel has a debt of Rs 800 crore. It owes Rs 400 crore to Stressed Assets Stabilisation Fund, the special purpose vehicle set up by government to hive off the stressed assets of erstwhile Industrial Development Bank of India.

It owes an equivalent amount to Asset Reconstruction Co, which acquired the bad debts from Bellary's original lenders"� ICICI Bank and Exim Bank.

The two lenders, Stressed Assets Stabilisation Fund and Asset Reconstruction Co have aggregated the debt to speed up recovery.

Sale of the plant is one option being considered by the lenders to settle the debt, provided they get a good price, the official said. This will involve splitting Bellary into the existing viable sponge unit and the unviable integrated steel plant.

Another option being considered is restructuring of the company by transferring its total debt to the so-called corporate debt restructuring mechanism, a voluntary and non-statutory arrangement between lenders and borrowers for restructuring sub-standard assets.

According to a due diligence report by McCann, at least Rs 400 crore of fresh capital is required for the first phase of restructuring, involving the company's rolling plant and blast furnace.