Economy

Defaulting promoters should not make a mockery of law, says Sajjan Jindal

Suresh P Iyengar Mumbai | Updated on March 27, 2018 Published on March 27, 2018

Speaking out JSW Group Chairman Sajjan Jindal at an event in Mumbai on Monday   -  PTI

Says JSW Steel was not allowed to participate in Essar Steel bid

Sajjan Jindal, Chairman and Managing Director of JSW Group, has raised concerns over defaulting promoters bidding for stressed assets by selling, at the last moment, their stake in the company that has defaulted on loans.

With obvious references to ArcelorMittal, Jindal said a promoter of a company sold his shares and claimed he is no longer the promoter of the defaulter company (Uttam Galva Steel) just to participate in the bidding.

“It is not fair in the spirit of law. I will be surprised if this kind of move is permitted in this country,” he said.

Shareholders invest in a company looking at the promoter, and he obviously cannot sell his shares after it defaults, he added.

For instance, he said, “If Sajjan Jindal invests in a company which later becomes a non-performing asset, and I walk off by selling my shares for one dollar, then what happens to the poor shareholder or the banker who lent money looking at Sajjan Jindal?”

Spirit of law

“The spirit of law is very important. A shareholder invests looking at Sajjan Jindal’s credibility and track record. I cannot just sell the shares and claim I’m eligible to participate in the bidding of another (sick) company.”

If the law is amended to allow defaulter promoters to participate, it is fine. If the promoter ‘cures’ himself by selling his shares and claims himself eligible, it is a mockery of the system, said Jindal.

On ArcelorMittal’s claim that it was a passive investor, Jindal said the company mentioned it was a promoter while raising money through bond issues. “Who decides whether someone is a passive or an active promoter?”.

On JSW Steel’s bid for Essar Steel, Jindal said the Committee of Creditors (CoC) has made the company ineligible as it did not participate in the first round.

“When the Essar Steel bid started, we were busy with other assets and thought we cannot acquire all steel assets on the block. Tata Steel has outbid us in Bhushan Steel and that is fair,” he added.

Allowing JSW Steel to bid for Essar Steel would have ensured more money for creditors. “We wrote to CoC saying we are willing to participate in an ‘as is where is’ basis. But in their own discretion they thought not to give a chance to a new entrant.

“It is okay if they do not want more money. After all, it is public money which we were willing to pay.”

Published on March 27, 2018
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