Tata Steel Ltd. expects that its acquisition of Bhushan Steel Ltd. under the corporate insolvency resolution process will generate significant synergy.
“We see lot of opportunities for synergies because it is a mill and (has) configuration with which we are very familiar,” TV Narendran, chief executive officer and managing director of Tata Steel said told reporters in New Delhi. “We know the blast furnace. It has a rolling mill with excess capacity. It is close to where we are currently operating. It takes years to build a plant, it took 10 years for Kalinganagar”
Narendra added that Bhushan Steel was the best asset on the block. His remarks came after a a meeting with the senior officials at the South Block. A senior official of Tata Steel said it was a “routine meeting”.
Tata Steel's bid was approved by the Bhushan Steel's lenders making it the first resolution among the twelve large corporate accounts which were referred for the insolvency by the Reserve Bank of India. Bhushan Steel sold 74.99 percent stake to Tata Steel’s wholly owned subsidiary Bamnipal Steel Ltd. for nearly Rs 159 crore. Lenders to Bhushan Steel also received 7.25 crore equity shares worth Rs 2 each, after conversion of Rs 14.5 crore worth loans in the company.
Bhushan Steel promoter Neeraj Singhal had filed a petition in the National Company Law Appellate Tribunal challenging the eligibility of Tata Steel as resolution applicant under Section 29A of the Insolvency and Bankruptcy Code. The NCLAT declined to stay Tata Steel’s acquisition.
“Tata Steel has gone through the process. I understand it is difficult to lose an asset which you have created,” Narendran said when asked about the petition.
According to its website, Bhushan Steel is the third largest secondary steel producer in India with an annual capacity of 5.6 million tonnes.