State Bank of India (SBI), with an exposure of R6,000 crore to Bhushan Steel, may bring in a management agency to oversee the day-to-day running of the unit, said bank chairperson Arundhati Bhattacharya.
Bhatttacharya said the banking sector’s exposure to Bhushan Steel is close to R40,000 crore and Punjab National Bank is the leader for the term loans whereas SBI leads the working capital consortium.
For the year ended March 2014, Bhushan Steel reported a net profit of just R59 crore due to a 29% rise in finance costs to R1,663 crore from R1,287 crore in FY13. Net revenues were R9,276 crore.
“I have already spoken to the other consortium leader, Punjab National Bank and other consortium leader, and some other banks. I have suggested we bring in a management agency that oversees the day-to-day running of the unit in this period,” she said.
She added that earlier, when there was an accident at the same plant, the consortium lenders had stipulated that the company should take on board a safety advisor and take all the safety steps the advisor deems necessary, which was done.
“Mainly, because this is an excellent plant and lenders' experts who visited the firm said the asset is of a very good quality, and is currently running properly, we don't want it to get into any kind of trouble and create any trouble for our exposure,” Bhattacharya said on the sidelines of the SBI Q1 results announcement.
The Central Bureau of Investigation (CBI) had arrested Syndicate Bank CMD SK Jain on August 2 for allegedly accepting a bribe of R50 lakh to extend credit facilities to private companies.