Insolvency proceedings: Sanjeev Gupta front-runner for stressed companies

When Sanjeev Gupta left Ludhiana, Punjab, in the early 1980s to study in the UK as an 11-year-old, not many would have thought he would return three decades later to emerge as the biggest saviour of multiple Indian companies facing insolvency proceedings in Indian courts.

Today, 46-year-old Gupta-owned Liberty House is a strong contender to take over auto parts maker Amtek Auto, ship builder ABG Shipyard and steel companies Bhushan Power & Steel and Adhunik Metaliks.

While litigation in these insolvency cases will take some time to resolve and one can expect more surprises on the way, Gupta has made sure that his voice is heard among the big boys of corporate India, which are also vying for some of these companies. "India is at the cusp of a historic clean-up and meteoric growth. These companies have limitless opportunities," said Gupta in a reply to email on Thursday. "These companies fit into our strategies, including green steel from ship-breaking, melting and auto integrated steel," he added.

Gupta first made news in India in 2016 when he took over two closed plants of Tata Steel UK. By November that year, Gupta went ahead and negotiated the acquisition of Tata Steel’s loss-making speciality steel business for 100 million pounds. The business employed around 1,700 people, and the transactions saved many jobs in the UK, making him a local hero of sorts.

Gupta had emerged as the white knight for Tata Steel after the century-old company decided to sell its UK assets. "The Tatas realised that they made a wrong call in taking over Corus at a huge premium and with financial hemorrhage, there was no other way out but to sell assets. And that's when Gupta stepped in, to buy a few steel mills in the UK," said a former director of Tata group.

Tata's steel mills were not the only assets that Gupta picked up. Over the years, Gupta has acquired many beleaguered companies in Europe, including a stake in a bank.

However, some bidders have raised objections that Gupta should not be allowed to bid for Indian companies since he defaulted on a $3 million loan to Exim Bank. Both the resolution professional and Liberty House are taking legal advice on this. This due has been cleared, said a banker. However, in the case of ABG Shipyard, lenders now plan to open discussion with the second-highest bidder. Lenders of Adhunik are also seeking directions from the National Company Law Tribunal (NCLT) on whether to accept Liberty House’s offer.

In Bhushan Power & Steel, which collapsed due to Rs 490 billion debt, the resolution professional had already announced that Tata Steel was the highest bidder. But Liberty House moved the NCLT to make a late bid and was allowed. Liberty House’s bid was '15 billion higher than Tata Steel’s. Lenders now expect more delay in the resolution after Liberty House’s bid.

"The Tatas would fight for this asset as it fits in their overall strategy. How Liberty House fights back and how much money it can bring to the table is to be seen," said a lender on the condition of anonymity.

Gupta said Liberty House would fund these acquisitions through a mix of equity and debt, and it would be asset-specific. "Our first big step into India is with a $5 billion investment and some 50,000 employees," Gupta said on the assets that Liberty House has bid for.