Mumbai: India’s largest steel company JSW Steel has shown interest in acquiring the loss-making Tata Steel’s British operations, ringing alarm bells in banking circles and pulling down its shares.
The company, controlled by billionaire Sajjan Jindal, already owes around Rs 37,512 crore. Its losses for the three months ending December 2015, stood at Rs 4,142 crore.
Tata Steel on Monday had said that there were seven companies who expressed interest for their loss making British operations but did not name them. The losses from Tata’s British operations for 2015 were £306 million. London’s Financial Times on Monday named JSW Steel as one of the companies that showed interest. After the report, JSW’s stock prices plunged 2.92 per cent to close at Rs 1,288 with its share down Rs 38.70 on Tuesday.
In response, JSW Steel on Tuesday said that as part of its “growth strategy” it “evaluates several opportunities including the current opportunity of UK steel facilities. It is premature to add any further at this stage.”
According to Reuters, “bankers are uncomfortable with the JSW Group’s debt and they think the company is only testing the waters with the Tata bid.” Sources close to JSW Steel, however, claim that they have never defaulted on their debt repayments and have been servicing their debt through companies that have been making a profit.
JSW Steel currently has no business operations or interests in the UK.
Its operations besides India are US JSW Steel (USA) Inc, and its subsidiaries in the US, JSW Panama (Holding) Corporation and its subsidiaries, JSW Steel (Netherlands) BV and its subsidiaries and Periama Holding LLC and its subsidiaries.
Mr Jindal, who wants to make his company the world’s third largest steel maker, tried unsuccessfully to acquire some assets from Italy’s second largest steel maker Lucchini in 2014. In 2010, JSW acquired Indian steel maker Ispat Steel.
According to its press release issued to announce its results for the quarter ending December 2015, JSW “has made a total provision of Rs 5,596 crore for diminution in value of investments, other than temporary, in the value of certain overseas investments, loans and advances and towards certain guarantees for borrowing by the subsidiaries.”
