Mumbai: JSW Steel is committed to acquiring bankrupt Bhushan Power and Steel, despite the investigations of fraud at the company and the undue delay in lenders to the sick steel mill turning over control to JSW. At the annual shareholder’s meeting, Sajjan Jindal, Chairman, JSW Steel, told reporters, “Our intent to take over Bhushan Power and Steel hasn’t changed. The resolution is taking unduly long but we are still keen. I see news reports on JSW pulling out of Bhushan or reducing the bid; we won’t do that."
However, MVS Seshagiri Rao, Joint MD and Group CFO, told reporters that JSW Steel has asked the NCLT for protection from litigation on the BPSL asset after control has changed hands. “Today, under the IBC, we only see a discussion on the rights of lenders. We also need to look at the rights of resolution applicants. In many cases, there is a lot of litigation coming in after control has changed hands. But applicant often has to face future litigation that can come from anybody. There is a disturbing judgement from the Delhi High Court which says that the Prevention of Money Laundering Act gets precedence over the Insolvency and Bankruptcy Code.
“We expect a clean company," Rao said. “In BPSL, we approached the NCLT for protection that the assets after change in control will not be accessed through any litigation. We have to see if NCLT will give that relief or not.“
JSW Steel acquired another bankrupt steel mill, Monnet Ispat, last September as part of a consortium with AION Capital. They are currently working on turning around the company. Rao said that the turnaround plan will be completed within the scheduled two years.
“We’re converting the integrated operations at Monnet Ispat to produce alloy steel, instead of TMT. We won’t supply to the construction industry but to the forging and automotive industries. This is outside the traditional commodity-grade steel so we will produce better products for better prices. Today we are operating the DRI and pellets units at 100% capacity but we are working on the integrated operations," he said.
Rao also said, at the sidelines of the shareholder meet, the cost of financing for industry has gone up and that the company is looking at newer avenues to find cheap debt. “The spreads between G-Securities and AA/AAA rated bonds is widening and the cost of financing (for corporates) is higher. We did a $700 million funding tranche in March at Libor+ 2%. It’s a great instrument for long-term capital expenditure. These are the kind of products we will explore."