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MUMBAI : JC Flowers Asset Reconstruction Pvt. Ltd emerged as the highest bidder for acquiring Hyderabad-based Sathavahana Ispat Ltd’s (SIL’s) stressed loans, said a person aware of the development, seeking anonymity.

Sathavahana Ispat, which manufactures pig iron and ductile pipes, owes 1,381 crore to a consortium of four lenders led by Canara Bank. The debt was tagged as non-performing in the lenders’ books over three years ago, he added. Lenders sell stressed loans to ARCs at a discount, either in exchange for cash or a mix of cash and security receipts, which are redeemable as and when the ARC recovers the loan amount.

“Lenders are trying to maximize the recovery for themselves by taking advantage of the recent surge in steel prices, currently at an all-time high," the person said, The consortium, also comprising State Bank of India (SBI) and IFCI, had received four bids for the company, he added.

Steel prices are at an all-time high due to a steep increase in the prices of iron ore, besides strong demand from China, India, the US, Europe and other emerging markets, according to a report by Care Ratings dated 30 March.

According to the person, the consortium evaluated the bids and selected JC Flowers Asset Reconstruction as the highest bidder. “As the next step and, in accordance with due process, it has proposed to now run a Swiss challenge process to maximize value," he said.

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