JSW offer Rs 300 bn for Bhushan Steel, Rs 50 bn more than Tata's bid

JSW Steel, one of India’s leading integrated steel manufacturers with a capacity of 18 million tonnes per annum (mtpa), has offered Rs 300 billion to take over debt-laden Bhushan Steel, Rs 50 billion more than rival bidder Tata Steel’s offer, according to a source close to the development.

The takeover, if successful, would boost JSW Steel’s capacity by 5.6 mtpa, even as the lenders would have to take a 50 per cent haircut on their dues, totalling Rs 590 billion.

JSW Steel, already set to acquire Monnet Ispat, is also planning to bid for Bhushan Power and Steel, for which the bids are closing on Thursday.

Tata Steel has so far not won any stressed asset in the current round. In the bidding for Electrosteel Steels, Tata Steel, which has a capacity of 12.7 mtpa, had come second to Anil Agarwal’s Vedanta.

The share price of Bhushan Steel was up 4.7 per cent to Rs 53.25 on Wednesday as speculators bet on a revival of the company under a new JSW management. JSW has offered to take over a sizeable part of Bhushan’s loan and to invest in working capital.

A notice by Bhushan Steel to the stock exchanges said the resolution plans received by the resolution professional (RP) were being examined as to whether they met the mandatory requirements of the code and regulations and additional regulations as required by the committee of creditors (CoC).

“Once the compliant offer is identified, the RP will call a meeting of CoC to present these plans for its approval,” the announcement said. The plan cleared by the CoC will then be sent to the National Company Law Tribunal for further action.

The acquisition of Bhushan Steel will be a big win for JSW Steel, which plans to ramp up its capacity from 18 mtpa to 23 mtpa by 2020. The capex programme for this, along with a few other strategic projects, is pegged at Rs 268 billion. The company is targeting 40 mtpa by 2030, which would be through a mix of organic and inorganic routes.

Tata Steel also has set some aggressive targets. In the next five years, it plans to double its capacity. The company has already got the board approval for the second phase of expansion at Kalinganagar.