The move by banks follows the arrest of Neeraj Singal, vice chairman and managing director of the company, by the CBI in connection with an alleged Rs 50 lakh bribery case involving Syndicate Bank chairman SK Jain.
SBI has an exposure of Rs 6,000 crore in the company. We are in talks with other banks, including Punjab National Bank which is the consortium leader for term loans, to appoint a management agency to handle day-to-day affairs. Banks may approach the board of the company with the proposal, SBI chief Arundhati Bhattacharya said. SBI heads the consortium for working capital loan.
She said when there was an accident in the company earlier, the consortium had advised a safety advisor on board and this was done by the company. Even in this case I dont think the borrower would have any objections, she said.
Ruling out any problem with their exposure, Bhattacharya said, The companys assets are of good quality. We dont expect any problem with that... operations of the company are not affected. Were not thinking of a financial audit at this point of time.
Its long-term borrowings were at Rs 21,664 crore while short-term debt was Rs 5,232 crore as on March 31, 2013. If the companys operations are affected, it will default on repayments. This will create a big headache for banks which are already reeling under heavy bad loans.
The SBI chief also ruled out the takeover of the management of the company. Its a tedious process. Its not easy to take over the management of a company.
Bhattacharya said the bank has no plans to change its loan sanction process in the wake of bribery charges at Syndicate Bank. Theres no policy change. We accept proposals and adopt strict due diligence while processing the loan applications. It (Syndicate Bank chairmans arrest) seems to be an aberration. It should be treated as an incident at an individual level, she said.
For the year ended March 2014, Bhushan Steel reported a net profit of Rs 61.96 crore on net revenues of Rs 9,675 crore. It has three steel plants in Orissa, Maharashtra and Uttar Pradesh. The promoters hold 71.29 per cent stake as per the BSE website. Meanwhile, shares of Bhushan Steel tumbled 10 per cent to hit its lowest trading permissible limit for the day of Rs 219.35 on the BSE. In the previous two trading sessions, the stock had fallen by 20 per cent. Its market valuation has fallen by Rs 3,655 crore to Rs 4,968 crore in just three days.