Fraud charges a worry, but still want Bhushan Power for now: JSW Steel

Firm seeks forensic audit reports of banks from RP, Tribunal asks for copy of its plea to RP, after which it would consider JSW request on August 6

JSW Steel on Monday said that it was “anxious” about the reports of fraud that had emerged at Bhushan Power and Steel (BSPL), though it was not “backing out from the ongoing resolution process for now”. In its submissions to the Principal Bench of the National Company Law Tribunal (NCLT), JSW Steel said that it wanted to know what was going at BSPL.

JSW had approached the NCLT with a plea that the forensic audit reports of banks which had detected the fraud at Bhushan Power and Steel should be shared with it. Over the past 10 days, Punjab National Bank (PNB) and Allahabad Bank had reported that they had detected frauds of Rs 3,800 crore, and Rs 1,774 crore, respectively.

In its report to the Reserve Bank of India on July 7, PNB said has detected a fraud of more than Rs 3,800 crore by BSPL which had been done by the company by misappropriating bank funds. In its report to the RBI, PNB also alleged that BSPL had manipulated its books of accounts to raise funds from consortium lender banks.

A week later, on July 13, Allahabad Bank too said that it had detected a fraud of Rs 1,774 crore by BSPL following the same modus operandi of misappropriating bank funds and manipulating books of accounts to raise funds from consortium lender banks.

A two-member bench of the NCLT asked JSW Steel handover a copy of its plea to the Resolution Professional (RP) of Bhushan Power and Steel, following which it would consider the plea on August 6. The two member Bench also observed that the reports of fraud of at BSPL would not have any impact on the outcome of BSPL’s corporate insolvency resolution plan.

The decision of JSW Steel’s Rs 19,000 crore plan for Bhushan Power is pending at the Principal Bench of NCLT. The insolvency resolution process of Bhushan Power has seen many twists and turns until now, with the initial rounds being a bidding war between JSW Steel and Tata Steel.

While JSW Steel had initially offered Rs 11,000 crore and later revised its bid twice, to Rs 18,000 crore and then finally Rs 19,000 crore, Tata Steel did not change its bid after making the final offer of Rs 17,000 crore. Bhushan Power owes close to Rs 37,248 crore to a PNB-led consortium of lenders. It is the sixth out of the 12 large stressed accounts identified by the Reserve Bank of India.