Aug 09 2014 : The Times of India (Chennai)
The State Bank of India (SBI) will push for appointing a managing agency to run Bhushan Steel after the arrest of its vice-chairman and managing director Neeraj Singal. The Central Bureau of Investigation (CBI) arrested Singal earlier this week in the Rs 50-lakh bribery scandal involving Syndicate Bank chairman S K Jain, who is also in custody.SBI has a Rs 6,000-crore exposure to Bhushan Steel, a sizeable chunk of the steelmaker's Rs 40,000-crore borrowings from Indian banks. Syndicate Bank has a Rs 100-crore exposure the steelmaker. Bhushan Steel's market cap stood at Rs 4,969 crore on Friday.
SBI officials said usually a consultancy firm or an investment bank is appointed as a managing agency to look after the day-to-day affairs of a company .
“We have talked to the consortium leader Punjab National Bank as well as other banks, including private lenders. We will try to bring in a management agency , which will look at the day-to-day running of Bhushan Steel. This is a very good quality asset, it is running properly and we don't want it getting into any kind of trouble,“ said Arundhati Bhattacharya, SBI chairman. She said that the managing agency would be like an administrator and there was no move to change the management “This is a listed company and we cannot just ask the management to go out,“ said Bhattacharya.
The SBI chairman said if approved by the consortium of lenders, the proposal would be taken to the board and that they expected the company to be conducive to it. “Earlier, when there had been an accident (at one of the company's plants), the consortium had advised appointing a safety adviser on the board, which the company did. Even in this case, I don't really think the borrower will have any objections,“ Bhattacharya said.
Bhattacharya said the SBI was not reviewing its lending to the steelmaker as the loan was a standard asset and instalments were being paid in time.
“I don't think a forensic audit is called for at this stage. If at a later date we feel it necessary , we will ask for it,“ she said.
Bhushan Steel has the country's largest cold-rolled steel plant and is a major supplier to automotive companies.
SBI officials said usually a consultancy firm or an investment bank is appointed as a managing agency to look after the day-to-day affairs of a company .
“We have talked to the consortium leader Punjab National Bank as well as other banks, including private lenders. We will try to bring in a management agency , which will look at the day-to-day running of Bhushan Steel. This is a very good quality asset, it is running properly and we don't want it getting into any kind of trouble,“ said Arundhati Bhattacharya, SBI chairman. She said that the managing agency would be like an administrator and there was no move to change the management “This is a listed company and we cannot just ask the management to go out,“ said Bhattacharya.
The SBI chairman said if approved by the consortium of lenders, the proposal would be taken to the board and that they expected the company to be conducive to it. “Earlier, when there had been an accident (at one of the company's plants), the consortium had advised appointing a safety adviser on the board, which the company did. Even in this case, I don't really think the borrower will have any objections,“ Bhattacharya said.
Bhattacharya said the SBI was not reviewing its lending to the steelmaker as the loan was a standard asset and instalments were being paid in time.
“I don't think a forensic audit is called for at this stage. If at a later date we feel it necessary , we will ask for it,“ she said.
Bhushan Steel has the country's largest cold-rolled steel plant and is a major supplier to automotive companies.
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