Delay in Bhushan Steel sale; billionaire Sanjeev Gupta's Liberty House joins the fray

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Even as submission of bids for the troubled steelmaker Bhushan Steel has been delayed by a week, a new player in the form of NRI industrialist Sanjeev Gupta and his UK-based Liberty House has joined the race.

While January 18 was earlier the last day for bids to be submitted, now it has been extended to January 25, said sources.

“We got a notice on Wednesday informing us of the change in dates,” an official from one of the companies expected to put in a bid, told Moneycontrol.

The delay has only heightened the race for Bhushan Steel, which was referred to the National Company Law Tribunal after piling up Rs 46,000 crore in debts. The Delhi-based company has a prized asset in its Odisha-based plant, and also has access to iron ore mines.

Gupta, who was in news for buying Tata Steel's assets in Europe, earlier this month made a binding conditional offer to Rio Tinto to buy Europe’s largest aluminium smelter based in Dunkerque, France.

"We won't be able to comment anything at the moment,"  said a spokesperson for the Liberty Group.

But sources close to Gupta said that the entrepreneur is keen to invest in stressed assets in India. "This is the best time to invest, and Liberty House has presented its expression of interest for the stressed steel assets on the block," the source said. The executive added that the Group is also looking at other steel assets on the block.

Gupta heads a Group with revenues of USD 10 billion and has interests in energy generation, metal manufacturing, engineering and natural resources.

While the combine of JSW Steel, its Japanese partner JFE and Bain-Piramal, were seen as frontrunners till now, the Anil Agarwal-led Vedanta is fast emerging as a favourite. “Especially after it out-bid Tata Steel for Electrosteel Steels (which was also referred to the NCLT), the Group is seen very bullish on steel assets,” said an executive from the industry.

According to reports, Vedanta had put in a bid of Rs 4,500 crore, much higher than Tata Steel’s bid of Rs 3,500 crore, for Electrosteel Steels.

Other companies said to be interested in Bhushan Steel include Tata Steel, ArcelorMittal and the government-owned SAIL. Sources in the know had earlier told Moneycontrol that the LN Mittal-company could put in a joint bid along with SAIL. It is also learnt that the South Korean steel major, POSCO, may have backed out of the race. Bhushan Steel would have been a compensation for POSCO after failing to make a start on its much-hyped steel project in Odisha.

Steely intent

Vedanta’s aggressive bid for stressed steel assets has surprised rivals, as the Anil Agarwal controlled behemoth is seen more as a mining player. Though steelmaking is seen as a value add on iron ore, margins differ. Margins in the steel business range between 10-16%, far less profitable than the mining business where margins are in the range of  30%.

Vedanta is the country’s largest iron miner, and also has interests in copper, zinc, bauxite and aluminium.

At the same time, Anil Agarwal had been vocal about his interests in the industry, despite the limited success till now. Tom Albanese, who had stepped down as Vedanta CEO last year, had in 2016 said that the company is open to take the acquisition route to enter the steel industry.

In an interaction with a business daily in 2017, Agarwal said the company will invest USD 1.5 billion to develop iron ore and steel assets in India. Clearly, the entrepreneur wants to make the most of the opportunities available.