JSW Steel has been evaluating a bid for Gontermann even before it was admitted to NCLT.
Sajjan Jindal-controlled JSW Steel
may bid for Gontermann-Peipers (India), a firm promoted by Pramod and Vinod Mittal, which was admitted to the National Company Law Tribunal (NCLT) last year.
The cast and forged rolls maker was admitted to NCLT
last December after an operational creditor filed an application under Section 9 of the Insolvency and Bankruptcy Code (IBC) on grounds of a default of Rs 22.85 lakh.
Sources familiar with the matter said there were three short-listed applicants for Gontermann. Apart from JSW Steel, a Kolkata-based company and an asset reconstruction company (ARC) had also submitted an expression of interest.
Earlier, a Chinese company, Xingtai Delong, had also shown interest, but stepped back in the wake of deteriorating Indo-China relations.
Resolution plans would have to be submitted by October 8, they said. JSW Steel
declined to comment on whether it would submit a bid. The company, however, had been evaluating a bid for Gontermann even before it was admitted to NCLT.
has won assets under IBC. In FY19, it completed the acquisition of Monnet Ispat & Energy jointly with AION Investments. Monnet is a primary steel producer that manufacturer and sells sponge iron, steel, and ferro alloys along with billets and pellets.
It also bagged a much bigger asset, Bhushan Power & Steel, in a Rs 19,700-crore bid. However, the deal got mired in legal proceedings, and is now in the last leg of hearing in the Supreme Court.
Asian Colour Coated Ispat, another asset that JSW bagged, is dragging. Lenders had approved JSW Steel’s Rs 1,550-crore bid, but US-based Interups Inc moved NCLT
to accept its offer for the downstream unit. The matter is in the tribunal now.
Gontermann, however, is a smaller asset. It owes financial creditors around Rs 261 crore and total admitted claims, including those of operational creditors and workmen/employees, are to the tune of Rs 327 crore.
Sources, however, indicated that Gontermann has surplus land, which gives scope for expansion of facilities.
Experts believed that the Covid-19 pandemic could result in a consolidation in the steel sector as smaller players were reeling from the crisis.
While integrated steel producers are operating at 85-90 per cent capacity, the average capacity utilisation in the sector is at 60 per cent, which indicates that secondary producers that account for 50 per cent of production are in dire straits.
JSW Steel has an aggressive plan for expansion to maintain market share in the increasing Indian steel market. Its expansion of capacity at Dolvi Works from 5 to 10 million tonne got delayed due to the lockdown and is now likely to be commissioned in the second half of FY21. In the next decade, the company plans to increase capacity from 18 mt to 45 mt.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.