Delay in Bhushan Steel acquisition may lead to governance
Tata Steel today said any delay in the acquisition of debt-ridden Bhushan Steel may lead to governance issues since the latter has a running plant.
The National Company Law Tribunal (NCLT) on Tuesday approved Tata Steel's bid for Bhushan Steel.
"In the short term, I think the delay in the process (acquisition) is a concern. We worry about the governance issues since Bhushan Steel is a running plant," Tata Steel executive director and chief financial officer Koushik Chatterjee told reporters here.
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The committee of creditor (CoC) had approved Rs 32,500-crore deal along with 12.27 per cent equity in Bhushan Steel offered by Tata Steel.
"We valued the assets on the basis of going concern and on the basis of strategic opportunity it can provide to us," he said.
Chatterjee said that the company want to see that the physical assets of Bhushan Steel are kept properly.
"The depletion in assets in any form will be a concern and we will certainly look into it whenever the process is completed," he said.
The company's chief executive officer and managing director, T V Narendran, said that acquisition of any plant is always an anxiety for the future.
"We think the quickest way to resolve that is to close the transaction fast," he said.
"The Bhushan Steel plant has a five million tonne capacity. We can easily see it going to 4-4.5 million tonne level. Beyond the five million tonne level, there will be a need for more investment," he added.
Narendran said the acquisition of Bhushan steel which has good presence in automotive steel will help the company in the growth of its automotive steel production.
"We also have an opportunity with Bhushan Steel because we are expanding the second phase of our Kalinganagar unit," Narendran said.
Tata Steel has already tied up for financing of Rs 35,000 crore for acquiring Bhushan Steel, of which the equity portion is Rs 18,000 crore, while the debt is Rs 17,000 crore.
"Post acquisition, the delisting of Bhushan Steel is also possible, but it is too early to comment," Koushik said.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)