By Aditya Kumar Gupta
Tata Steel Ltd has acquired a controlling stake in Bhushan Power and Steel, outbidding all competitors. Bhushan Power and Steel, one of the largest producers of steel in India, was taken to bankruptcy court last year and owes its lenders about Rs 45,000 crore.
JSW and Tata Steel were the top contenders for the bid, with Tata Steel offering Rs 45,400 crores and JSW offering Rs 28,000 crore for the debt-laden company.
Read More: Tata Steel seeks to bolster ongoing expansion by acquiring Bhushan Steel
The companys decision to acquire Bhushan Steel will increase its current debt figure of Rs 88,000 crores to over Rs 1 lakh crore. According to media reports, as a part of the bid, Tata Steel will pay Bhushan Steel’s financial creditors Rs 35,200 crores, while operational creditors will receive Rs 1,200 crores.
Tata Steels move to acquire Bhushan Steel is just one amongst many decisions under its rapid expansion strategy. Bhushan Steel is the largest manufacturer of auto-grade steel in India, with an annual capacity of 5.6 million tonnes. The company also has several high-profile clients including General Motors, Hyundai Motors and Ford. The company acquired a net loss of about Rs 1,607 crores in the fourth quarter of 2017, however, its financial problems have been evident since 2014.
Over 500 companies are currently facing bankruptcy court proceedings and this bid marks the first resolution of a stressed asset under the Insolvency and Bankruptcy Code (IBC), 2016.
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