Bhushan steel promoter questions NCLT auctions

KOKATA: On a day when the Tatas were seen emerging as a frontrunner for Bhushan Steel, the company’s promoter Neeraj Singal questioned the whole process of auctioning off defaulting steel companies through NCLT (National Company Law Tribunal).
“Steel prices have gone up by ?10,000 per tonne in last six months. The entire issue of default resulted from a sectoral problem. It was not a promoter issue in the first place. On top of it came external factors like de-allocation of captive coal blocks. Each and every steel company suffered, except two — JSW Steel and Tata Steel that too because they have access to raw material,” Singal told ET on Friday evening. Along with other steel players we also faced huge competition from cheap steel imports for nearly two years before the government decided to take protective steps like MIP, antidumping duty and safeguard the steel sector, he said.

“Why are banks taking up to 80% haircut when they can recover their entire money in a few years’ time?” he asked.

“We built the company with our sweat and tears. Our lives have been built around the business and this company. I have made an offer to pay back, the entire amount that is due to our lenders in a few years,” he added.

The steel industry needs to be given one chance to restructure, now that there is an upturn in the sector. Steel is a cyclical industry. Every time there is a downturn it needs a bit of restructuring. JSW Steel went through restructuring. Globally too, a number of companies including ArcelorMittal have been restructured, Singal pointed out.

“We, as in the steel industry promoters, are now in a much better position to pay back our lenders. I, for one, want to pay up the entire debt in a few years’ time. The banks should take up equity and take advantage of the upswing in fortunes of the steel industry to recover their money, “ he reasoned.

Some 400 Bhushan employees have also submitted a bid. The employees would pay an amount upfront and later bring in PE investor to pay back the entire debt. The employees, some of whom have been with the company for 20-25 years, feel they are best suited to run it. This kind of bid is perhaps a first for a stressed steel asset undergoing bankruptcy proceedings. Bhushan Steel currently has a run rate of 4 million tonnes. The employees have said are confident of ramping it up to its full capacity of 5 million tonnes, particularly at a time when the steel market has bounced back and demand is strong.