Published: Fri, March 09, 2018
Health | By Jay Jacobs

Bhushan Steel sale to improve banks' asset quality: Moody's

Bhushan Steel sale to improve banks' asset quality: Moody's

Shares of beleaguered steel firm Bhushan Steel, now undergoing bankruptcy proceedings, got a shot in the arm on Thursday when it became clear the country's leading steel maker Tata Steel has emerged as the highest bidder.

The NCLT has asked the resolution professionals to share their stand on the matter and has listed L&T's plea in Bhushan Steel case on March 23.

"Tata Steel can add the maximum value as well as draw the most benefit from Bhushan Steel", said an analyst who covers both the industry.

Meanwhile, on Thursday at 10:16 hours, the stock of Bhushan Steel was trading at Rs. 45.45 per share, up by 11.95 per cent. Tata Steel was at Rs. 642.30 per share, up 0.88 per cent.

Since Bhushan Steel is one of the Indian banking sector's largest nonperforming assets, It also sets a precedent for the resolution of the other NPAS in the steel sector, the global ratings agency added.

The company's bid was higher than JSW Steel, which had also bid for the stressed asset through a National Company Law Tribunal-led process. L&T alleged that Bhushan Steel, undergoing corporate resolution, has defaulted on payment for the construction of its Anugul factory in Odisha and that it should not be treated as an operational creditor.

Bhushan Steel has an annual production capacity of 5.6 million tons and would significantly boost Tata Steel's annual output, now 13 million tons.

L&T is seeking to recover about ₹900 crore from Bhushan Steel for supply of capital goods. In fact, PNB reportedly had an exposure of close to Rs 5,000 crore, much of which will now come back to coffers and help it to partly offset the damage allegedly wrought by Nirav Modi over the past seven years.

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