Bhushan Steel rallies 20% on reports of ArcelorMittal eying stake

Shares of beleaguered steel maker Bhushan Steel rallied as much as 20 per cent today amidst media reports suggesting that steel majors, including ArcelorMittal, are looking to acquire the stressed assets of the company.

The Bhushan Steel scrip hit an upper circuit limit of 20 per cent at Rs69.80 at 11:03 in the morning trade.

Global steel giant ArcelorMittal is reported to have evinced interest in buying debt-laden Bhushan Steel, which has been referred by the Reserve Bank of India to the National Company Law Tribunal under the Insolvency and Bankruptcy Code (IBC).

"LN Mittal-led ArcelorMittal has submitted an expression of interest for Bhushan Steel, which has been referred to the National Company Law Tribunal (NCLT) under Insolvency and Bankruptcy Code," the report said.

The company owes nearly Rs42,000 crore to lender banks and was admitted into NCLT in July 2017. It is one of the two biggest companies to have been admitted under insolvency proceedings this year along with Essar Steel.

The insolvency process is reported to have attracted seven buyers, including Tata Steel, JSW Steel and Vedanta.

Bhushan Steel has a hot-rolled steel mill in Odisha and cold-rolling plants in Kolkata and Chandigarh. It also has a pellet plant and an iron ore beneficiation plant besides a captive power plant. Bhushan Steel has a significant presence in auto steel categories with a 5.6-million tonne integrated steel unit, including a cold rolled facility, in Odisha.

Besides, Bhushan Power & Steel has a steel-making capacity of three million tonnes spread across plants in Odisha, West Bengal and the union territory of Chandigarh.

Bhushan Steel reported net loss of Rs1,486.13 crore in fiscal first quarter ended 30 June 2017 against a net loss of Rs656.21 crore in Q1 of 2016-17. Net sales rose 23.51 per cent to Rs3,649.79 crore in Q1 of 2017-18 over Q1 of 2016-17.

Bhushan Steel is India's third largest secondary steel producing company with an existing steel production capacity of 5.6 million ton per annum

The National Company Law Tribunal had, in July, reserved its order over the bankruptcy petition filed by the country's largest lender SBI against Bhushan steel Ltd. A bench headed by Justice MM Kumar also reserved order on the plea filed by Punjab National Bank against Bhushan Steel & Power Ltd.

NCLT had, on 13 July, issued notices to Bhushan Steel Ltd as well as Bhushan Steel and Power Ltd over insolvency proceedings initiated by their lenders State Bank of India and PNB. The companies were directed to file their reply.

Both the petitions were filed under the Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, where the financial creditor initiates insolvency proceedings with a claim. While SBI was the lead banker to Bhushan Steel, PNB was the lead banker to Bhushan Steel and Power.

SBI was claiming to recover Rs4,295 crore from Bhushan steel along with $490 million foreign currency loan.

Earlier, in June, lenders led by the State Bank of India had decided to begin insolvency proceedings against Bhushan Steel, Essar Steel and Electrosteel Steels by referring them to NCLT for recovery under the Insolvency and Bankruptcy Code (IBC).

The decision was taken at a marathon meeting chaired by SBI. While Bhushan Steel is in default of Rs44,478 crore to banks, Essar Steel owes Rs37,284 crore and Electrosteel Steels, Rs10,273.6 crore.

These three borrowers are among the 12 accounts identified by the Reserve Bank for immediate reference to the National Company Law Tribunal. These 12 accounts alone constitute a quarter of the over-Rs8,00,000 crore of NPAs.