Bhushan Steel auction: JSW Steel, Tata Steel, company's employees interested bidders

The much delayed insolvency resolution proceedings for Bhushan Steel has finally made it to the second stage. Bids for the debt-ridden company were submitted day before yesterday-after being pushed back multiple times-and the highest bidder is expected to be announced tomorrow. In the running are JSW Steel, Tata Steel and a group of employees of Bhushan Steel along with a private equity firm, according to The Economic Times.

While the much-hyped bidding process for the maker of auto grade steel had generated a lot of interest at home and abroad, several interested parties-including ArcelorMittal, Steel Authority of India and UK-based Liberty House-ultimately did not submit resolution plans to Deloitte's Vijaykumar V. Iyer, the appointed insolvency resolution professional.

JSW Steel has reportedly bid in partnership with Piramal Enterprises. A third partner, Japan's JFE Steel Corp, reportedly backed out a day before the deadline for bids.

Though the liquidation value had been set at Rs 15,000 crore-this is the minimum value set for a stressed asset by the committee of creditors, below which bids are not accepted-"looking at the competition, JSW Steel is expected to double its bid amount. It can be between Rs 25,000 crore to Rs 30,000 crore," a source earlier told PTI. That's not surprising, given that JSW Steel is known to be in expansion mode. It is also evaluating opportunities for acquisitions to achieve the target of increasing manufacturing capacity to 40 million tons by 2030.

Bhushan Steel's annual capacity of 5.6 million tonne-according to its website it is the third largest secondary steel producer in the country-could give it a leg up. It will also provide JSW Steel a gateway to the east and north, as most existing facilities of the beleaguered company are concentrated in the east. Similarly, for Tata Steel, historically concentrated around Jamshedpur, the acquisition makes sense as it will help to tighten its grip on the eastern region.

Bhushan Steel was on RBI's first list of 12 companies to be referred to the National Company Tribunal Law (NCLT) for insolvency proceedings, which together accounted for 25% of total bank NPAs. According to the latest Economic Survey, claims admitted under the insolvency proceedings for the maker of auto grade steel stand at a whopping Rs 55,989 crore. That makes it the biggest bankruptcy, so far, to go under the hammer.

Essar Steel, Monnet Ispat and Electrosteel Steels are the other major players in this space currently undergoing bankruptcy proceedings. It will be interesting to see if the group of 400-500 employees of Bhushan Steel, who have reportedly submitted a resolution plan in partnership with a Singapore-based firm, will be able to recreate a David versus Goliath win.