Bhushan Steel got Rs 6,900 cr loan from SBI, PNB, others in April

Written by Shayan Ghosh | Mumbai | Updated: Aug 8 2014, 18:14pm hrs
Bhushan SteelBhushan Steel scrip has already tanked 38% this week on BSE following the arrest of Syndicate Bank CMD SK Jain in the bribery scandal.
Bhushan Steel, which continues to be in news over the alleged role of its vice-chairman and managing director Neeraj Singhal in the Syndicate Bank bribery case, had got a sanction of an additional loan of Rs 6,900 crore by a consortium of lenders in April this year.

Bhushan Steel's whole-time director (finance) Nittin Johari confirmed the development stating, Banks have sanctioned Rs 6,900 crore that will be disbursed in the next three years.

The company scrip has already tanked 38% this week on BSE following the arrest of CMD SK Jain in the Rs 50-lakh bribery scandal.

Bhushan Steel VC & MD Singhal, who has been absconding, was arrested by the CBI on Thursday following the issuance of a non-bailable warrant against him by a special CBI court. The court issued the NBW after dismissing the anticipatory bail of Singhal filed earlier.

The allegation against Singhal is that he was instrumental in passing on the bribe amount to Jain and was present at his house when CBI team reached the spot for search and raid operations.

Sources said the loan sanctioned in April to Bhushan Steel was approved by the joint lenders forum (JLF) comprising 22 lenders headed by public sector lenders State Bank of India (SBI) and Punjab National Bank. It would provide some breather to the steelmaker, which according to Bloomberg data had R31,754 crore of net debt in FY14.

At the end of FY14, the company's long-term borrowings stood at Rs 25,566 crore and the short-term borrowings were to the tune of Rs 6,273 crore.

Two bankers aware of the development said Bhushan Steels loan of close to Rs 31,000 crore was a special mention account (SMA-2) in the consortiums banks, but had slipped back to the SMA category (overdue between 0-30 days).

For the year ended March 2014, Bhushan Steel reported a net profit of R59 crore on net revenues of R9,276 crore owing to a 29% rise in finance costs to R1,663 crore. According to the company's website, it has three steel plants in Odisha, Maharashtra and Uttar Pradesh, and is promoted by Singal who holds 32.30% stake along with chairman Brij Bhushan Singhal who owns 20.15% in the company.

"Bhushan Steel was facing problems owing to the mining ban in Odisha and, thus, they had sought a fresh loan, a senior banker aware of the development said.

The company has been grappling operational issues as well. In November last year, an explosion occurred in the slag pit during the trial run of a blast furnace at the Meramandali plant in Odisha and Bhushan Steel was directed by State Pollution Control Board, Odisha not to start operations of furnace till the further direction.

However, in April this year, the steelmaker received all consents and approvals from the state pollution control board, Odisha for starting and operating the blast furnace.

"On November 13, 2013 an explosion occurred in the slag pit.... due to which the operation of the blast furnace remained suspended resulting in loss of production and consequential loss to the company, the company said in its FY14 results statement.