Sesa Goa edges out JSW Steel to win Bellary Steel & Alloys

Sesa Goa has emerged on top in a battle for ownership of the assets of Bellary Steel & Alloys — a little-known company that owns 700 acres in a part of Karnataka known for its mineral riches — edging out JSW Steel in a court directed auction process that took place earlier.

The Goa-based owned mining company owned by billionaire Anil Agwarwal, emerged triumphant after it challenged a decision by IFCI, a financial institution, declaring JSW the winner. In an auction carried out in December last year under the supervision of the Delhi High Court JSW had seemingly emerged the winner, outbidding Sesa Goa by offering to pay Rs. 210 crore compared to Rs. 206 crore.
But Sesa Goa contested the decision on the ground that the winning offer was delayed. The High Court agreed, allowing Sesa Goa to rebid in a so-called inter se bidding process.

Sesa Goa bid Rs. 220 crore in an auction on March 9, resulting in the Anil Agarwal-owned mining firm becoming the new owner of the land, plant and machinery of Bellary Steel, said two people with direct knowledge of the development. JSW did not submit a new bid.

An inter se bidding process typically involves asking already shortlisted companies to come up with fresh quotes. In this case, since Sesa Goa and JSW Steel were the only companies in the fray, the lead lender IFCI asked the two firms for new bids, after Sesa Goa challenged the earlier decision to award the assets to JSW Steel.
The assets of the ailing Bellary Steel, which includes modern machinery and over 700 acres of land, were put on the block by IFCI, for recovery of dues, under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. Under this Act, lenders can recover unpaid dues through sale of assets.
“It is not the sale of Bellary Steel, the company,” said one of the two persons cited earlier.

“The transaction was for the assets of the company and Sesa Goa's bid of Rs. 220 crore emerged the highest,” he added.

The shift of ownership of the assets of Bellary Steel to Sesa Goa could impact Sajjan Jindal's plan to build an integrated steel complex chain in Karnataka, as Bellary Steel's 700-acre land is in a prime mining area and close to JSW Steel's existing plant.

Ownership of the assets of Bellary Steel would have been a second feather in the cap for Sajjan Jindal, after his high profile acquisition of Ispat Industries in December last, that catapulted the JSW group the largest steelmaker in India by capacity.

Bellary is home to large deposits of iron ore, which is key to steelmaking.
Despite having close to 14 million tonnes of steel capacity, the Jindals are not fully integrated with iron ore and coal.

The group would need about 30 million tonnes of ore to meet increased capacity. Bellary Steel is a 0.5 million tonne steel plant that is not yet fully built. It ran into problems due to mounting debts and IFCI was forced to seize assets from the promoters, local businesspersons S Madhav and S Parvathi.

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