JSW Steel makes Rs 13,000 cr bid for Bhushan Power, Rs 29,700 cr for Bhushan Steel; total commitment Rs 45,000 cr

Sajjan Jindal controlled JSW Steel, which is India's largest steelmaker with 18 million tonne (MT) a year capacity, has reportedly submitted a Rs 13,000 crore bid for financially sick Bhushan Power and Steel (BPSL) on Thursday. It got one rival bid from Tata Steel, which quoted Rs 11,500 crore, says Hindu Business Line.

JSW Steel has submitted its resolution plans for three companies --- Bhushan Steel, Monnet Ispat and BPSL--- and in all it emerged as the lead bidder. For Bhushan Steel (BSL), it submitted Rs 29,700 crore bid, including Rs 28,000 crore debt takeover and Rs 1,700 crore capital infusion.

Ajay Piramal's Piramal Enterprises is Jindal's partner in BSL takeover bid. Tata Steel has quoted Rs 24,000 crore plan for the company. Anil Agawal's Vedanta Ltd did due diligence for both the Bhushan companies but backed out from submitting the resolution plan.

JSW Steel-Aion consortium submitted Rs 2,700 crore debt takeover plan for Monnet Ispat, which was founded by Jindal's brother-in-law Sandeep Jajodia. The consortium offered 18 per cent equity to lenders and agreed to infuse Rs 1000 crore as equity capital for settling dues and working capital.

With three bids, Jindal made a financial commitment of Rs 45,000 crore. It's not sure how much of it will weigh down on the steelmaker's books as debt. Earlier, JSW Steel's Joint Managing Director & Group CFO Seshagiri Rao told Business Today that they want to keep the debt to EBITDA ratio of the company at 3.75 and debt to equity ratio at 1.75. The new bids along with the expansion plans of the company will make it tough for JSW to handle it in one go, say industry experts.

The new steel capacity Jindal wants to add will require investment of more than Rs26,800 crore over the next three years, including Rs15,000 crore to double the capacity of the plant in Dolvi, Maharashtra, from five million to 10 MT.
 
In addition, JSW group is now foraying into paint manufacturing, financial services and electric vehicles. The Rs66,000-crore JSW Group already has an aggregate debt of Rs60,000 crore, and Jindal's ambitious plans will only raise the figure.