Liberty House eye Indian stressed assets

Below is the verbatim transcript of the interview.

Q: The street has keenly awaited this bid on Bhushan Power and Steel. If you could give us your course of action now, we believe that in fact your bid was rejected. So what is the way forward?

A: We are asking the National Company Law Tribunal (NCLT) court to consider whether on the basis that we believe our bid is superior that we should be allowed to have our bid opened and considered.

Q: You have already approached the NCLT, you are going to do it today?

A: Yes.

Q: You are saying that your bid is superior, the details that we have is that Tata Steel has offered around Rs 17,000 crore, price to around Rs 7,000 crore, so, ballpark around Rs 24,000-25,000 crore. Your bid is superior means it is better than that?

A: It is but that is for the committee to open and see. I cannot go into details of how it is superior but it is definitely superior.

Q: It is definitely superior to in comparison to what Tata Steel has offered?

A: Right.

Q: So Bhushan Power and Steel that is something that we are working with that yes Liberty House has gone ahead and put in a bid over there, but what about other assets, have you put in a bid for any other ferrous assets, maybe in Essar Steel, have you put in a bid over there and if not, why not?

A: We have to choose, we cannot bid for everything. We had to choose. We want to enter specific sectors, we want to enter the primary steel sector so we chose Bhushan Power, we want to enter recycling of steel, so we are going to bid for ABG Shipyard to break ships there and recycle them. We wanted to be in the auto sector so we bid for Amtek Auto.

Q: Incidentally let us talk about Amtek Auto. We will get back to the ferrous subject, but in terms of Amtek Auto what we understand is that the Committee of Creditors (CoC), the committee is likely to meet either today or later this week. What is the update on the bid over there, what have you put on the table? Initially the talk was in fact all the bids that have come in for Amtek Auto, they are not up to even the liquidation value. If you could give us some details, your rationale over there, what kind of money have you put on the table for Amtek Auto?

A: Any of these processes, I do not think is appropriate to talk about numbers or what we have bid and so on. In principle strategically it is a great fit for us, we have already bought Amtek Auto businesses in the UK from the UK RP (resolution professional) equivalent and those businesses are already integrated with our business and are already very successfully turned around.

Similarly in India, we are very confident that if we win Amtek Auto, we will be able to integrate that with our business which is the largest in the UK now in the sector and we will be able to make it a great success. So that is the reason and the basis on which we are bidding for these assets. We believe we will be good strategic fit and hence we will be able to make propositions which are superior to others.

Q: No doubting the kind of capabilities and the kind of record that you have. You have turned around so many assets as well across the globe. However, coming to this bid on Amtek Auto or various other listed companies, you are a bidder, so you will want the assets coming in at the best price really, do you believe that there is equity value out there because a lot of equity shareholders in India, they hold Amtek Auto shares, your understanding, is there equity value after taking such a write down on debt not just for this particular asset, but any of the assets that are up for sale?

A: I will make a general comment. Unfortunately a lot of these businesses have come into a situation where they had ballooned debt so equity has suffered, debt is almost ahead of equity. I do not want to go into specifics of any company, but in general that is an unfortunate situation that equity is suffering because of the debt becoming unsustainable.

Q: Just to work with a few details, the assets that you have mentioned that you have put in a bid for is Bhsushan Power and Steel, you are talking about the ABG Shipyard as well as Amtek Auto right, any other assets you are looking at from the infrastructure space, from the steel space?

A: Not in the first round. Out of the first 12 companies we carefully chose the sectors and the companies which fitted as well. We chose Bhsushan Power because they are specialists in making auto steel and they have state of the art plants to do so. So integrates really well with our auto strategy and the other two companies I mentioned. So, these are the companies out of the first dozen companies which we have bid for.

Second round, when there are other companies, smaller companies which come up, there will be a natural bolt on to many of the things we are doing. However, that will come in due course.

Q: You have turned around a lot of steel assets, a lot of assets actually globally, but in India, what makes you so optimistic on these assets, what makes you so optimistic that you can turnaround some of these assets. If you could give us a sense of what kind of value do you see going ahead as well because this would be one of the first turnarounds that you are looking at in India?

A: We have a wide geographical footprint already and we have had great experience in what we specialise in turning around assets in these sectors which we have perfected over time. India is a natural home for us, we are after all -- the promoters of our group are basically Indian. We have been watching India for a long time, we have had a presence in India for very long time, we have been reticent about entering India because it has complications, but we feel now is the right time to come to our country. These specific assets which we are talking about, fit perfectly within our bandwidth, within our capability, within our strength and they are growth sectors for the country.

Auto, India will be undoubtedly one of the great growth stories. Steel is fundamental to the growth of an economy. If the economy in India grows, steel will grow and especially the integration between steel and auto and such things which is our model, our model is to integrate various parts of our business whether it be energy, whether it be steel, whether it be banking. So that integration model makes us feel very confident, coming to India and implementing that in India will be a success.