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TATA Steel Buys Bhushan Steel

TATA Steel buys 72% share in Bhushan steel for a whopping INR 35,200 Crores.

Tata Steel has announced its acquisition of Bhushan Steel (BSL) through its wholly-owned subsidiary Bamnipal Steel Ltd (BNPL), completing the resolution of the first case under the Insolvency and Bankruptcy Code (IBC), 2016.

Tata Steel said in a press statement that it has taken a controlling stake of 72.65% in BSL and paid the admitted corporate insolvency costs and employee dues, as required under IBC. Further, settlement of amounts equivalent to Rs35,200 crore towards financial creditors of BSL is being undertaken, and Rs1,200 crore will be paid to the operational creditors of BSL over a period of 12 months, said the statement.

Meanwhile, Neeraj Singhal, former vice-chairman and managing director of Bhushan Steel, has moved the National Company Law Appellate Tribunal (NCLAT) seeking a stay on the takeover by Tata Steel. Mint has learnt that Singhal, a member of the family of the original promoters, also wants to prevent his equity from being transferred to Tata Steel. As of March, the old promoter group owned 43.9% of the equity in publicly-listed BSL.

Tata Steel’s legal team has filed a caveat, a pre-emptive application that the court will not pass an order on this appeal without hearing the company.

This is not the first of unforeseen delays for Tata Steel. The firm has already fended off litigation from Larsen & Toubro Ltd, one of Bhushan’s operational creditors, and BSL’s employees.

Dismissing these cases, on Tuesday the National Company Law Tribunal (NCLT) approved Tata Steel’s takeover of BSL.

The delays in its takeover bid have led to corporate governance issues at the plant, with the senior management hinting earlier to Mint that there might be cases of under-invoicing and contracts being awarded to people known to the erstwhile promoter.

A spokesperson for Tata Steel said that employees of the company have moved into key locations of BSL on Friday, including Khopoli, Dhenkanal and Sahibabad, wresting physical control of plants before NCLAT hears Singhal’s plea on Monday.

The investment in BSL through BNPL has been done through a combination of equity of Rs158.89 crore and an inter-corporate loan of Rs34,973.69 crore. Additionally, Rs100 crore has been paid by BNPL to the financial creditors of BSL to repay old debt.

The acquisition is being financed through a combination of external bridge loan of Rs16,500 crore availed by BNPL, with the remaining Rs18,700 crore coming in the form of equity infusion by Tata Steel in BNPL. The bridge loan availed by BNPL is expected to be replaced by debt raised at BSL over time.

Nominees of BNPL have been appointed on the board of BSL and the existing directors of BSL are deemed to have resigned from its board, according to the terms of the approved resolution plan.

BNPL shall be classified as the “promoter” of BSL, and the existing promoters/promoter group re-classified as public shareholders of BSL, according to the resolution plan approved by NCLT.

ArcelorMittal, SAIL may finally seal Rs 5000-crore JV

KOLKATA: ArcelorMittal on Wednesday said it has agreed to make concessions to Steel Authority of India (SAIL) on technology transfer to iron out contentious issues in their proposed Rs 5,000­crore automotive steel joint venture. The announcement comes a day after steel minister Chaudhary Birender Singh said the global steel major and SAIL are in ‘final stages’ of formalising the deal. The two companies are believed to be close to ironing out key commercial terms to close the deal, including non­compete and exit clauses as well as finalising policy on arbitration, agency reports said, quoting sources. Responding to ET, an ArcelorMittal spokesperson said: “Our discussions with SAIL continue to make progress, with both parties making significant efforts towards reaching a final agreement. Progressing our partnership to a formal joint venture stage remains the objective, but given the confidential nature of this discussion, we will be making no more comments at this time.

When contacted a SAIL official, who did not wish to be named, said: “A joint task force formed to work out the partnership is moving ahead with its job. A feasibility report is now being prepared as part of the preparatory work on the deal”

ArcelorMittal, SAIL may finally seal Rs 5000-crore JV

KOLKATA: ArcelorMittal on Wednesday said it has agreed to make concessions to Steel Authority of India (SAIL) on technology transfer to iron out contentious issues in their proposed Rs 5,000­crore automotive steel joint venture. The announcement comes a day after steel minister Chaudhary Birender Singh said the global steel major and SAIL are in ‘final stages’ of formalising the deal. The two companies are believed to be close to ironing out key commercial terms to close the deal, including non­compete and exit clauses as well as finalising policy on arbitration, agency reports said, quoting sources. Responding to ET, an ArcelorMittal spokesperson said: “Our discussions with SAIL continue to make progress, with both parties making significant efforts towards reaching a final agreement. Progressing our partnership to a formal joint venture stage remains the objective, but given the confidential nature of these discussions we will be making no further comment at this time.” When contacted a SAIL official, who did not wish to be named, said: “A joint task force formed to work out the partnership is moving ahead with its job. A feasibility report is now being prepared as part of the preparatory work on the deal.”

India becomes second largest steel producer

Stainless steel production rose to 3.32 million tons for 2016: ISSF

India overtook Japan to become the second-largest steel producer in the world after China in 2016, according to data released by the International Stainless Steel Forum (ISSF).

India’s stainless steel production rose to 3.32 million tons for 2016 showing an impressive growth of about 9% over 3.0 million tons achieved in 2015, ISSF said at their annual conference in Tokyo, Japan.

“This is a great moment for the Indian stainless steel industry,” KK Pahuja, president, Indian Stainless Steel Development Association (ISSDA) said. “ISSDA urges continuous policy support from the government to take the Indian stainless steel industry to newer heights. ISSDA will continue to work with all stakeholders to promote stainless steel based solutions for sustainability and growth.”

“Several government initiatives like ‘Make in India’, smart cities, focus on improving sanitation & waste management facilities, building new infrastructure are is likely to give a strong push to the stainless-steel industry in future,” Mr. Pahuja added.

Source: The Hindu

Steel industry likely to benefit from GST, rate stands at 18 per cent

KOLKATA: Steel industry is likely to benefit from the new GST rate for steel which has been finalised at 18% ­­also the slab that includes most number of items. With key inputs like coal, iron ore pegged at 5%, which is the lowest slab under GST, steel companies like JSW Steel, JSPL, Tata Steel, SAIL etc., could be looking at lower input costs. Together, with a substantial slash in transport costs due to unified and standard tax rate under GST, this is likely to help steel companies reeling under large debt and also keep steel prices stable. Commenting on it, H Shivramkrishnan, Director, Commercial, Essar Steel said the GST rates are on expected lines. “We expect the requirement of working capital to go up in the immediate future. But going forward, GST will have a beneficial impact on the steel sector and the economy,” he added. On Friday, Tata Steel stock went up 0.53% to Rs 489.40 on BSE, JSW Steel rose 1.12% to close at Rs 193.55. Companies expect a reduction in logistics costs and time under GST. Presently, each time it crosses a state there are number of check post which delay the supply of goods to the customer. Under GST, a unified and standard rate of tax will reduce this cost and delay. In the post GST regime, industry estimates a 40 to 45% saving on time taken in movement of goods. Exclusion of gas from GST purview is a matter of concern especially for gas­based steel and power plants, said Essar Steel. It will also impact a number of smaller secondary sector players too who plan to use gas, a cleaner alternative fuel to produce steel.

 

Source: Economic Times.

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