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India's JSW eyes acquisitions of stressed steel mills

10 Aug 2017, 6.33 am GMT

India's JSW eyes acquisitions of stressed steel mills

Singapore, 10 August (Argus) — India's private-sector JSW Steel is open to acquiring steel mills in the country that are undergoing bankruptcy proceedings.

Five Indian producers — Bhushan Steel, Bhushan Power & Steel, Essar Steel, Monnet Ispat and Electrosteel Steels — have been placed under administrators by the country's bankruptcy court, the National Company Law Tribunal. The companies have been given 180 days to reach debt recovery deals with lenders, and then face liquidation if a deal cannot be reached.

JSW Steel expects administrators to take 60 days understand the finances of these companies, and then seek expressions of interest from external investors. The five mills began their bankruptcy processes between mid-July and early August.

JSW, which has 18mn t/yr of crude steel capacity, would be interested in acquiring companies that have a large base of flat steel manufacturing.

Essar has the largest such production capacity of all the affected companies, but its 10mn t/yr capacity may make it too big for JSW to buy outright.

Any acquisition plans by JSW would hinge on it securing deal financing that would not disrupt its existing debt covenants with lenders. The company is currently investing funds to double the capacity of its west coast plant in Dolvi to 10mn t/yr from 5mn t/yr.

Private-sector Tata Steel is the only other steel sector investor likely to be interested in these companies. Most of the investment interest in the distressed steel mills is likely to come from domestic and overseas financial investors.

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