JSW evaluating whether to bid for stressed assets – Mr Seshagiri Rao
Mr Seshagiri Rao Jt MD & Group CFO of JSW Steel Talking to ETNow said that differentiation should be IIL13 BSEI done between wilful defaulters and those who suffered from external factors and the former should not be allowed to take part in bidding processes.
Q - Are you planning to bid for some of the stressed assets?
A - As far as stressed assets are concerned: the framework is ready. Under that framework, several companies' expression of interest is sought and the bidding dates are announced. The companies are submitting the bids. As JSW Group is present in the core sectors of the economy, we are interested in some of these stressed assets. But at this stage, we are in the evaluation stage.
Q - There have been a lot of tweets from Mr Jindal saying people should not be allowed to trade in stocks that are in NCLT or also the fact there is a faction which is talking about how the existing promoters should not be allowed to bid. What are your comments on the same?
A - We have to differentiate between the promoters who are wilful, who are dubious and the promoters who have worked in the interest of the company and the shareholders, but are facing the current situation because of some external reasons. What the industry or generally the stakeholders are talking about is that the promoters who are dubious, who are wilful defaulters, should not be allowed to participate in the process. If they are allowed to participate, then the same promoter who is responsible for this situation where the company has been pushed into insolvency, will get the company handed back to them after taking very large haircuts. It is not that none of the promoters should be allowed to participate. I think if the government takes steps in this direction by bringing an ordinance or by bringing in guidelines will bring a lot of transparency and also bring credibility to the process.
Q - There are a lot of conversations that are going around with IRPs at this point in time. It points to the fact that they are looking for a second round of forensic auditing in the accounts that are present. Have you already seen through the forensic accounts of any of these cases that you are looking at?
A - We are not privy to the forensic audit, maybe some of these companies, the banks have done their forensic audit. If forensic audit is negative, it leads to a wilful default. Therefore, my presumption is that the forensic audit has already been done, they have not been classified as wilful defaulters but if the second forensic audit is being instituted right now, we have to see the its outcome. It is a welcome step if forensic audit is done and reconfirmation is given to the prospective bidders that nothing wrong has happened in the past. It gives a lot of credibility and also comfort to the bidders.
Q - Coming to steel business, commodity prices are looking up. What would be the kind of impact that we will see because of the coking coal prices and other input costs?
A - There are cost pressure and that is why the commodity cycle is looking up. But at the same time, we are seeing a surge in the input prices. Earlier, these input price hikes were seen only in the case of iron ore, coking coal and thermal coal. Now, it is spreading to other materials whether you take refractories, electrodes or ferro alloys or zinc, a lot of the other input materials the costs are going up quite substantially. Because the raw material input prices have gone up globally, we are seeing the price uptick even for steel prices. Not only the prices are going up the demand outlook for the steel sector globally is looking better. Europe is doing well and there is a recovery in the US economy. Plus Chinese exports are falling. They are quite positives for the global steel industry. In India, the steel demand in the second half is expected to be better. So steel prices in my view will go up in the second half.
Source : Economic Times