NCLT approves JSW Steel's $2.7 billion bid for Bhushan Power & Steel

An Indian bankruptcy tribunal approved JSW Steel Ltd.’s $2.7 billion bid for Bhushan Power & Steel Ltd., making it the second asset the steelmaker has bagged under the nation’s insolvency process.
The National Company Law Tribunal approved the offer Thursday. Bhushan Power will add 3.5 million tons a year capacity to the Sajjan Jindal-led mill’s operations and expand the Mumbai-based company’s footprint to the eastern part of the country where it has no presence. JSW bid about 197 billion rupees, higher than rivals Tata Steel Ltd. and Liberty House Group.

JSW Steel to invest over Rs 50 bn for boosting downstream manufacturing

JSW Steel plans to pump in over Rs 50 billion to strengthen its downstream manufacturing capacity and is also keen to pursue stressed downstream assets that will come up for bidding in the next round.
JSW Steel, which announced a capex investment programme of nearly Rs 450 billion to expand its capacities in Karnataka and Maharastra, is planning to invest over Rs 50 billion to strengthen its downstream manufacturing capabilities, company's Joint MD Seshagiri Rao told PTI.

This will enable the company to re-orient its product mix and focus on high-value special steel products and customisation, he said.
"As part of its effort to ramp up downstream capabilities, JSW Steel will also pursue stressed downstream steel assets that will come up for bidding in the next round," he added.
"The next set of assets is either downstream or very small capacities. So, if it makes sense to our downstream integration strategy. We will evaluate the asset and pursue," Rao said.
The investment in downstream capabilities by JSW Steel is aimed at capitalising the incremental demand expected to be generated across sectors for specialised steel.
While 300 million tonnes (MT) of steel consumption is expected to come in, the steel intensity across applications is coming down.
"This is where the demand for very high-value steel products is rising. The circular economy is becoming very active," Rao said.
Jayant Acharya, Director Commercial - Marketing and Strategy, JSW Steel, said, the company will "reduce focus in commodity space and enter into alloy steel and special steel space to make the business more sustainable in the long term. Our aim is to look at more and more de-competitive business segment as a key indicator of focusing more on special steel categories".
As part of its long-term play, the company is deprioritising its focus on commodity steel space.
According to Rao, while the overall capacity of JSW Steel will grow by 40 per cent over the next three years, the downstream capacity will increase by 60 per cent, colour coated capacity will go up by 140 per cent and tinplate capacity will increase six-fold.
The company expects special steel products to contribute 40 per cent of its future volumes while customisation products will add the rest 60 per cent.
"We are not going to produce the commodity. Basis our very customised steel portfolio and high-end value-added product mix, the business will become less volatile," Rao said.
JSW Steel believes that it is unperturbed about new competition from global steel players.
"We think there is enough space for growth and healthy competition is good. If you look at the competition earlier, certain companies which were stressed were at times forced to sell materials at lower prices to generate cash flows whereas with healthy competitors that problem will be eliminated to some extent," Acharya said.
The company said that it sees the Indian steel landscape becoming more mature from a competition perspective.
"We see our growth potential with respect to India across the short, medium and long-term. I don't think we need to worry about the competitive landscape," he added.

JSW Steel to invest over Rs 50 bn for boosting downstream manufacturing

JSW Steel plans to pump in over Rs 50 billion to strengthen its downstream manufacturing capacity and is also keen to pursue stressed downstream assets that will come up for bidding in the next round.
JSW Steel, which announced a capex investment programme of nearly Rs 450 billion to expand its capacities in Karnataka and Maharastra, is planning to invest over Rs 50 billion to strengthen its downstream manufacturing capabilities, company's Joint MD Seshagiri Rao told PTI.

This will enable the company to re-orient its product mix and focus on high-value special steel products and customisation, he said.
"As part of its effort to ramp up downstream capabilities, JSW Steel will also pursue stressed downstream steel assets that will come up for bidding in the next round," he added.
"The next set of assets is either downstream or very small capacities. So, if it makes sense to our downstream integration strategy. We will evaluate the asset and pursue," Rao said.
The investment in downstream capabilities by JSW Steel is aimed at capitalising the incremental demand expected to be generated across sectors for specialised steel.
While 300 million tonnes (MT) of steel consumption is expected to come in, the steel intensity across applications is coming down.
"This is where the demand for very high-value steel products is rising. The circular economy is becoming very active," Rao said.
Jayant Acharya, Director Commercial - Marketing and Strategy, JSW Steel, said, the company will "reduce focus in commodity space and enter into alloy steel and special steel space to make the business more sustainable in the long term. Our aim is to look at more and more de-competitive business segment as a key indicator of focusing more on special steel categories".
As part of its long-term play, the company is deprioritising its focus on commodity steel space.
According to Rao, while the overall capacity of JSW Steel will grow by 40 per cent over the next three years, the downstream capacity will increase by 60 per cent, colour coated capacity will go up by 140 per cent and tinplate capacity will increase six-fold.
The company expects special steel products to contribute 40 per cent of its future volumes while customisation products will add the rest 60 per cent.
"We are not going to produce the commodity. Basis our very customised steel portfolio and high-end value-added product mix, the business will become less volatile," Rao said.
JSW Steel believes that it is unperturbed about new competition from global steel players.
"We think there is enough space for growth and healthy competition is good. If you look at the competition earlier, certain companies which were stressed were at times forced to sell materials at lower prices to generate cash flows whereas with healthy competitors that problem will be eliminated to some extent," Acharya said.
The company said that it sees the Indian steel landscape becoming more mature from a competition perspective.
"We see our growth potential with respect to India across the short, medium and long-term. I don't think we need to worry about the competitive landscape," he added.

Insolvency process: Sajjan Jindal's JSW makes top bid for Bhushan Power

Sajjan Jindal-controlled JSW Steel has made the highest bid for Bhushan Power & Steel in the second round of bidding for the asset in going through the insolvency process. The bids were opened on Tuesday.
JSW’s revised offer stands at Rs 193.5 billion, up from Rs 110 billion submitted in February. Bhushan Power owes its lenders around Rs 470 billion.

Tata Steel, which had been selected as the highest qualified bidder twice over in the first round, kept its offer unchanged at Rs 166 billion, but improved the payout to operational creditors from Rs 1 billion to Rs 5 billion.
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Liberty House, too, kept its offer unchanged at Rs 185.9 billion, but improved the amount payable to operational creditors from 20 per cent to 50 per cent. Sources close to Liberty House said some concerns of Bhushan Power and Steel’s committee of creditors were addressed on Tuesday.
Representatives of the three bidders — Tata Steel, Liberty House and JSW Steel — as well as operational creditors were present at Tuesday’s meeting of the CoC, according to a National Company Law Appellate Tribunal (NCLAT) order.
The bids will be evaluated by process advisors and lenders will submit their observation to the NCLAT on August 16. The next date of hearing in NCLAT is August 17. But lenders do not believe that the case is resolved as yet. Tata Steel had challenged the rebid in the NCLAT and the Supreme Court (SC).
ALSO READ: Sajjan Jindal's JSW Steel revises offer for Bhushan Power to Rs 180 billion
However, if JSW Steel finally wins Bhushan Power, it would give the company a toehold in the east. Bhushan Power has a 3 million tonne of steelmaking capacity, which JSW believes can be ramped up to 5.5 million tonnes at a nominal cost. Industry sources said, JSW made an aggressive bid for Bhushan Power to retain its leadership position in the domestic market.
JSW Steel’s current capacity is around 18 million tonnes. It recently acquired Monnet Ispat & Energy, which has capacity of 1 million tonne, with AION, under the Insolvency and Bankruptcy Code (IBC) proceedings. JSW Steel’s number one position was under threat from Tata Steel, which was close after the acquisition of Bhushan Steel, an asset that was contested by the two steel makers.
Tata Steel’s capacity increased to 18.5 million tonnes, from 13 million tonnes after acquiring Bhushan Steel under the IBC. Bhushan Steel has a capacity of 5.5 million tonnes but it can be ramped up.
Having lost Bhushan Steel, JSW Steel decided to go for Bhushan Power, at any cost. “The funding was already in place for Bhushan Steel,” said sources close to development.
ALSO READ: JSW Steel crude steel output grows 8% to 1.4mn tonne in July 2018
JSW Ahead of a final call on the bids by the CoC, JSW Steel revised its offer by more than 60 per cent, which prompted the creditors to call for a rebid. But, Tata Steel moved the NCLAT, which asked the CoC to decide on the existing resolution plans. Accordingly, Tata Steel was again selected as the highest qualified bidder. It was not the first time that Tata Steel had been selected. In end-June, lenders had formally communicated to Tata Steel that it had been selected. However, fresh submissions from operational creditors and Liberty House stayed the voting on the resolution plan.
Later, the NCLAT decided to allow revised bids, but Tata Steel moved the SC. In light of the SC hearing on August 10, the NCLAT shifted the deadline for revised bids to August 13.

Sajjan Jindal's JSW Steel revises offer for Bhushan Power to Rs 180 billion

In a dramatic twist, Sajjan Jindal's JSW Steel has revised its offer for Bhushan Power & Steel to Rs 180 billion, prompting the committee of creditors (CoC) to invite fresh offers from bidders.
JSW Steel sent a letter with the revised offer to the CoC on Thursday night, a day before the committee's meeting to finalise the offer. JSW is offering lenders an upfront payment of Rs 180 billion.
Sources close to the development said the CoC on Friday gave time to the bidders to revise their offers by 9 am on July 31. A CoC meeting will be held at 10 am.
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Liberty House would revise its offer, said a company official. However, both Tata Steel and Liberty House were understood to have opposed the idea of revised bids during Friday's meeting.
Tata Steel had offered Rs 175 billion to lenders, while Liberty House had offered Rs 186 billion.
ALSO READ: JSW Steel aims to turn around insolvent Monnet Ispat in a year
Earlier, JSW Steel's offer to lenders was Rs 110 billion as upfront payment, and the total bid value was Rs 170 billion. The revised bid value, including capital infusion, now stands at Rs 240 billion.

Sajjan Jindal's JSW Steel revises offer for Bhushan Power to Rs 180 billion
The lenders were supposed to take a final call on the Bhushan Power & Steel bids in accordance with the National Company Law Appellate Tribunal (NCLAT) order. Vacating its earlier stay, the appellate tribunal had directed the CoC to consider the resolution plans submitted by three firms. These firms are Tata Steel, Liberty House and JSW Steel. The NCLAT also directed the CoC to call all the three bidders along with operational creditors and suspended board of directors to the meeting.
So far, JSW Steel has bagged Monnet Ispat & Energy, a 1.5 million tonnes per annum (mtpa) plant, under the Insolvency and Bankruptcy Code (IBC), even though it had bid for Bhushan Steel and Bhushan Power & Steel.
Bhushan Steel was acquired by Tata Steel. Bhushan Power & Steel, in fact, was also a two-way race initially. Tata Steel and JSW Steel had submitted their bids within the deadline. However, Liberty House made a late bid.
The CoC had rejected Liberty House's bid on grounds of late submission but the National Company Law Tribunal (NCLT) asked the CoC to consider it. Tata Steel had challenged the NCLT order in the NCLAT, but no stay on the proceedings was granted.
Bhushan Power & Steel has a 3 mtpa plant and debt of Rs 470 billion.

Domination of JSW, Tata, SAIL in steel set to be challenged by 4th player

The domination of three players in the domestic steel sweepstakes — JSW Steel, Tata Steel and Steel Authority of India — is all set to be challenged with a fourth player entering the game.
The new kid on the block could either be ArcelorMittal and Nippon Steel combine or Russian major VTB Capital-led consortium, whose bids, according to the National Company Law Tribunal, will now be referred for consideration by the committee of creditors.

India has largely eluded ArcelorMittal, one of the world’s largest steel players. Though, the firm had a stake in Uttam Galva Steels that they have sold. Winning Essar Steel could change that equation. If they win the 9.7 mtpa Essar Steel assets, the group has said it would invest in the company to increase its capacity to 18 mtpa — closing in on the domestic big boys of the game.
Analysts say that many of the competing steel players in the country are worried of their financial muscle and their ability to expand capacity once they have a toe hold and are doing whatever it takes to keep them away.
VTB Capital, which has a 40 per cent stake in Numetal, the company which has bid for Essar Steel, has no operational experience in running the steel business. But it has invested equity in steel firms across the world and this will be its first entry into this sector in India. In its initial bid, Numetal had roped in Rewant Ruia, part of the promoter family, as one of the members in the consortium through Aurora Enterprises.
But it had also given an undertaking that the other consortium members were ready to buy out the Ruia stake in Aurora if he was considered ineligible (the law states that promoters cannot bid without paying overdues).
In a revised bid, which has now been considered invalid by the NCLT, it had roped in JSW in a step-down subsidiary in which they will have a 25 per cent stake (the rest is with Numetal Mauritius).
The NCLT’s Thursday decision, declaring the second round of bids not “legally sound”, is not good news for Vedanta either. The firm has already tasted success by bagging the 1.5 mtpa Electrosteel Steels in the NCLT. By acquiring Essar Steel, too, Vedanta could have become a reasonably sized steel player with 11.2 mtpa under its belt.
Tata Steel is already challenging the position of JSW, which was numero in the steel sweepstakes with over 18 mtpa. That is because Tata Steel has already bagged Bhushan Steel in the insolvency auction and, thanks to that, Tata Steel would see its capacity increase from 12.7 mtpa now to 18.3 mtpa in one go.
Of course JSW, with private equity fund AION, is expected to bag Monnet Ispat & Energy, as they were the sole bidders. This will help them go past Tatas with 19.5 mtpa.
But the Tatas are also the highest bidders in Bhushan Power & Steel, a decision which has been challenged by Liberty House in the NCLT. If the decision goes in favour of the Tatas, they would be clearly ahead of JSW adding in 3 mtpa of additional capacity.
Analysts say even if VTB eventually brings in JSW as a partner in its step down subsidiary Numetal, JSW and the Tatas would have nearly similar capacities in the market.

JSW may double its bid to Rs 300 bn for debt-laden Bhushan Steel: Sources

In a bid to give tough competition to competitors, JSW Steel is expected to double its bid value for debt-laden Bhushan Steel, a source privy to the development said.
The last date to submit the bids now is February 3, 2018.
On January 24, the insolvency resolution professional (IRP) of Bhushan Steel had extended the deadline for submission of resolution plans to February 3, 2018 from January 25, 2018.
"The liquidation value has been set at Rs 150 billion, below that the bid will not be accepted. Looking at the competition, JSW Steel is expected to double its bid amount.
It can be between Rs 250 billion to Rs 300 billion," the source said.
Liquidation value is the minimum value set for a stressed asset by the committee of creditors. Below that bid will not be accepted.
Luxembourg-based multinational steel firm ArcelorMittal and domestic industry major Tata Steel are also in the race for Bhushan Steel, which is undergoing insolvency proceedings.
JSW Steel has decided to bid for Bhushan Steel, maker of auto-grade steel in India, in a team. It has roped in its Japanese business partner JFE Steel Corp and Piramal Enterprises, which is the flagship firm of Piramal Group, for the purpose.
Bhushan Steel, one of the 12 non-performing accounts referred by the Reserve Bank of India for National Company Law Tribunal (NCLT) proceedings, owes an amount of Rs 444.78 billion to its lenders.
According to the information on Bhushan Steel Ltd website, the company is the 3rd largest secondary steel producer in the country with an existing steel production capacity of 5.6 million tonne per annum.