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Bhushan Power race on

Bids for Bhushan Power & Steel Ltd (BPSL) may top Rs 21,000 crore as JSW Steel, Tata Steel and Liberty House of the UK are all set to make an aggressive pitch to acquire the company under the bankruptcy process.

By Sambit Saha in Calcutta
  • Published 13.08.18
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Calcutta: Bids for Bhushan Power & Steel Ltd (BPSL) may top Rs 21,000 crore as JSW Steel, Tata Steel and Liberty House of the UK are all set to make an aggressive pitch to acquire the company under the bankruptcy process.

The National Company Appellate Law Tribunal (NCLAT) had asked the bidders to put in the revise bids by Monday, August 13.

Industry sources said all the three bidders are expected to add more muscle to their existing bid.

Tata Steel had been declared the highest bidder by the committee of creditors (CoC) of Bhushan Power. However, JSW decided to revise its bid, topping the rest a day before the CoC was to finalise the Tata offer. JSW had earlier made a commitment to make an upfront payment of Rs 11,000 crore compared with Rs 17,000 crore by the Tatas and around Rs 18,600 crore by Liberty.

The creditors backed the Tatas over Liberty despite the latter offering a higher upfront payment to the lenders as they were not convinced with Liberty's ability to pay. Tata Steel challenged the NCLAT decision of a revised bid in Supreme Court on Friday but the apex court declined to stay the process and asked the appellate tribunal to wrap up the process.

"There is a strong possibility that numbers will be reworked upwards and can potentially touch Rs 21,000 crore or thereabouts. Apart from business, there appears to be some ego involved in the game," said a corporate observer aware of the development.

Bhushan Power, which owes banks nearly Rs 47,000 crore, has an installed capacity of 3.5 million tonnes in Odisha, and three downstream units, including one near Dankuni in Bengal. Industry experts suggest the capacity can be raised at a nominal cost of Rs 1,500 crore to up to 5 million tonnes and, hence, it may be justified for the bidders to make aggressive bids.

Among the three in the race, Tata Steel has so far bagged the biggest asset - Bhushan Steel - from the bankruptcy court, while JSW has acquired Monnet Ispat and Liberty House has gobbled up Adhunik Metaliks.

In Bhushan Steel, JSW lost out to Tata Steel. Many see the late charge from Sajjan Jindal's company as an attempt to get even. Moreover, it could also be a territorial and tactical battle.

For decades, Tata Steel has maintained a stronghold in the east of India which is rich in iron ore and coal mines and has access to rail network and deep water port. It had been operating a plant in Jameshedpur in Jharkhand for over a century before entering Odisha with the Kalinganagar plant.

Jindal's JSW grew from the south. After building India's largest single location plant in iron-ore rich Vijayanagar in Karnataka, it moved to west, a key steel consuming market, after acquiring Ispat.

If JSW gets Bhushan Power, it will finally have a presence in the east, which has so far been dominated by the Tatas.

"It would be worth watching if Tata Steel will go all the way to prevent JSW from entering the east," said an observer.

JSW is keen not to lose the opportunity. After all, it had always grown by mergers and acquisitions. But it has not been lucky in the bankruptcy court, except Monnet's million-tonne plant, which is a minnow compared with Bhushan Steel, Bhushan Power or Essar Steel.

"We were unsure of the outcome of the Essar Steel insolvency process and, hence, went for a revision of a bid for Bhushan Power," a JSW official said.

Tata Steel did not comment on revising the bids for Bhushan Power.