Stocks

Bhushan Steel shares hit upper circuit on bids from Tata Steel, JSW

Reuters/PTI | Updated on February 19, 2018 Published on February 19, 2018

Bhushan Steel, one of the 12 non-performing accounts referred by the Reserve Bank of India for National Company Law Tribunal (NCLT) proceedings, owes Rs 44,478 crore to its lenders. It makes auto-grade steel in India.

Shares of Bhushan Steel rose 19.9 per cent to Rs 53.90 on the NSE to post its biggest intra-day gain since October 23, 2017. Over 1.37 crore shares were traded on the platform. Bhushan Steel shares soared close to 20 per cent to hit upper circuit limit of Rs 53.85 on the BSE and trading volume spurted more than 1.37 times with over 27 lakh shares changing hands, exchange data showed.

Debt-laden Bhushan Steel Ltd today said Tata Steel, JSW Living Pvt Ltd and a consortium of the company’s own employees have submitted bids to take over its assets.  The company in a filing to the BSE said that as part of the resolution process, “the resolution professional (RP) has received resolution plans from Tata Steel, JSW Living Private Ltd and Employees of Bhushan Steel Ltd“.

JSW Living Pvt Ltd is a joint venture between JSW and Piramal Enterprises.

A broad summary of the resolution plans were presented by the RP to the committee of creditors (CoC) in their meeting held on February 16, 2018, Bhushan Steel said.

The company further said that the RP and its advisors will now review the plans so as to ensure that these plans are in conformity with the provisions of the Insolvency and Bankruptcy Code, 2016, and additional requirements as stipulated by the CoC in the process document. .

“Once the resolution plans are identified, another meeting of CoC will be convened to present the compliant plans for the consideration of the CoC,” Bhushan Steel said.

When asked about Tata Steel’s bid offer, its managing director and CEO TV Narendran said, “I would not comment on the numbers. Media report says we are the highest ... if media reports about other bids are right then probably we are the highest.” The company was interested in these assets right from the beginning because these are in the eastern region, he told reporters on the sidelines of an event organised by CII here.

Bhushan Steel, one of the 12 non-performing accounts referred by the Reserve Bank of India for National Company Law Tribunal (NCLT) proceedings, owes Rs 44,478 crore to its lenders. It makes auto-grade steel in India.

According to the Bhushan Steel’s website, it is the third largest secondary steel producer in the country with annual capacity of 5.6 million tonne.

Tata Steel shares end down 5.82%

Tata Steel fell as much 7 per cent to Rs 642, in its biggest intra-day percentage drop since November 2016. The stock ended lower by 5.82 per cent or Rs 40.05  at Rs 648.25 on the BSE.

JSW Steel dropped as much as 5.8 per cent to Rs 295 intra-day. The stock ended the day down 2.97 per cent at Rs 302.45.

Tata Steel shares fell as its offer for Bhushan was at a premium, potentially hurting Tata's profitability. The debt-to-EBITDA ratio will get distorted as its total debt is going to more than triple, while EBITDA will not even double, according to an analyst with a domestic brokerage, who did not want to be identified.

Bhushan's lenders now will have to take a haircut of as little as 30 per cent as opposed to previously expected 50 per cent, according to an analyst.

Published on February 19, 2018
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