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Lenders choose Tata Steel as preferred bidder for Bhushan Power & Steel

Tata Steel has already bagged Bhushan Steel, which has a capacity of 5.6 million tonnes

Abhijit Lele Dev Chatterjee & Ishita Ayan Dutt  |  Mumbai/Kolkata 

Bhushan Power & Steel
Bhushan Power & Steel

The committee of creditors (CoC) for has decided on Tata Steel as the preferred bidder. The battle for was closely fought between UK-based Liberty House, which submitted a late bid, and Tata Steel. People in the banking sector said that both bids were in close range initially.

"The difference was in the range of Rs 5-10 billion. Tata had offered around Rs 175 billion and Liberty Rs 180 billion as immediate upfront to financial creditors. But if you consider operational creditors, including employees, the Tata Steel bid looked slightly better. There is no standardised format to decide on what basis to select the bid," they said. Tata Steel's bid also has an additional capital infusion of Rs 75 billion. Subsequently, the wanted comfort that and Tata Steel can bring in the cash.

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"In the case of Liberty House, finances were not fully tied up and the felt the Tata bid was better, as it was fully backed by financial arrangement. The matter has been referred accordingly to the tribunal, which has to take a call," said the people cited above. They added that in terms of track record, the felt Tata Steel was a more established player. A spokesperson said there was no information on the bid.

The matter was slated for hearing in the National Company Appellate Law Tribunal (NCLAT). Last week, Liberty had presented bank guarantees before the lenders. The NCLAT, where the matter is being heard, had asked the CoC to go ahead with the selection process and keep its decision in a sealed cover. The final decision would be subject to the outcome of the verdict.

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The CoC had filed an application seeking clarification in the process. was a two-way race initially. Tata Steel and Steel had submitted their bids within the deadline. However, made a late bid. The CoC had rejected Liberty House's bid on grounds of late submission but the National Company Law Tribunal (NCLT) asked the CoC to consider it. Tata Steel had challenged the order in the NCLAT, but no stay on the proceedings was granted. If Tata Steel does bag Bhushan Power & Steel, it would likely make it the largest steel player in the domestic market.

Tata Steel has already bagged Bhushan Steel, which has a capacity of 5.6 million tonnes.

Tata Steel's capacity prior to the Bhushan Steel acquisition was around 13 million tonnes. Bhushan Power & Steel has a capacity of around 3 million tonnes and debt of around Rs 470 billion.

First Published: Thu, June 28 2018. 02:57 IST