IBC process to push consolidation in steel industry, says EY

Press Trust of India  |  New Delhi 

The and Code (IBC) will accelerate consolidation in and help many global players who have been struggling to enter India, said today.

"What will be the likely impact of that for the industry. That's the area of very interesting transformational subject and the whole landscape is suppose to change," he said.

He was speaking during Minerals and Metals Forum here.

The process being on a fast track resolution mechanism, a substantial part of the debt will be quickly realised or renewed and moved to a more sustainable cash flow structures, Agarwal said.

"The intense competition amongst bidders also bodes well for potential write backs of the provisions of lenders. A healthier banking industry, with unlocked flow of capital, will now be in a position to fund huge investments required to build new capacity for meeting future metals demand for the country," he added.

There has been a wave of consolidation in the globally but not reflected within as yet, he said, adding that process has triggered this and will also witness the theme playing out domestically.

"Globally the wave of consolidation that happened in the eluded But this is one trigger which will fast forward and accelerate consolidation in the Indian industry. We are already seeing that happening. has acquired one, has acquired one," he said.

Over a period of a year or so, several key players are already in the process or are on the cusp, would have undergone a resolution, he said.

With the balance sheet problem having been resolved or deferred, stronger metals industry will emerge post this restructuring with sustainable debt levels, he added.

Stronger players are already using this opportunity to consolidate their position in the country and some new players from other sectors are also entering the fray thereby broadening the canvas, he said.

The Indian players, he said, are also seeking synergy and hence they will be in the consolidation game.

"With the new players entering, the whole vendor supplier customer relationship is going to be reworked in the country and which is the big disruption for the as well as opportunity for many," he added.

Hopefully the governance standards in the country particularly the and steel industry might improve, he said.

Given the immense growth potential India offers in long term demand growth, industry participants will be more confident of committing investments for capacity additions, he said.

Some ambitious plans of government like the 300 million tonnes per may be realisable, he added.

"With a stronger industry because the industry will more sort of confidant to try and try move towards capacity expansion on the to meet our 300 million tonnes target," he said.

"Many of the global players had struggled to enter India and this is immensely significant opportunity for them to try and set up the footprint in the country," he said.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Thu, June 21 2018. 17:30 IST