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Tata Steel emerges as the top bidder for debt-laden Bhushan Steel

The Committee of Creditors (CoC) of debt-laden Bhushan Steel informed on March 6, said Tata Steel in its release

Aditi Divekar  |  Mumbai 

Tata Steel

Tata Steel, one of the largest steel producers in the country, has received formal communication from Resolution Professional of Bhushan Steel identifying it as the highest evaluated compliant resolution applicant to acquire the controlling stake in the latter.

The Committee of Creditors (CoC) of debt-laden Bhushan Steel informed on March 6, said in its release.

Following the development, advisors to the CoC and Resolution Professional of Bhushan Steel are currently in discussions with on the resolution plan, informed the company. The next steps in the process will be as per the stipulations under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code 2016 (IBC).

Neeraj Singhal-promoted Bhushan Steel had received resolution plans from Sajjan Jindal-led Steel and employees of Bhushan Steel. The Odisha-based company operates a 5.6 million tonne capacity and is a high-margin flat product business which can cater to the domestic as well as the export auto market. As on March 31, 2017, Bhushan Steel has a debt of Rs 481 billion.

“If is able to grab this asset there are multiple benefits for Tatas as all their plants will be aligned in the eastern part of the country giving them access to iron ore in Odisha. In addition to this, all the three locations can be developed as integrated steel complexes,” said Giriraj Daga, senior analyst at Visaria Securities.

Rationalisation will also take place in term of market share as Bhushan Steel will get access to Tata Steel's export market, while Tata can get access to Bhushan's domestic market share, said analysts.

Meanwhile, some brokerages were of the view that acquisition of Bhushan Steel could put Tata Steel's leverage in worsened position.

currently has a three million tonne capacity at Kalinganagar along with a 10-million tonne plant at Jamshedpur, both in the eastern part of the country. The company alongside also has plans to expand its Kalinganagar capacity by another five million tonnes in coming years.

First Published: Thu, March 08 2018. 00:40 IST