Bankers order forensic audit of Bhushan Steel

Cracking the whip on cash-starved Bhushan Steel, a consortium of bankers, on Monday, ordered forensic audit into the books of account of the company, and asked its promoters to infuse more capital to ensure that it remained solvent.

The decision was taken at the lenders' meeting here on Monday to take stock of the situation following the arrest of Bhushan Steel Vice Chairman and Managing Director Neeraj Singal by the CBI in the alleged cash for loan scam, involving Syndicate Bank Chairman S.K. Jain.

The forensic audit will be conducted by a reputed audit firm to be appointed soon. It will examine if the company used loans for the right purpose or there is a diversion of funds.

Besides, the consortium, led by Punjab National Bank (PNB), decided to appoint three nominee directors on the board, representing the lenders.

It was also agreed that banks would appoint an independent engineer to monitor the manufacturing operations of the company and its ongoing expansion activities, PNB said in a statement.

As many as 51 banks have total exposure of about Rs.40,000 crore in the company.

In order to overcome tight cash situation, bankers asked the company to de-leverage by bringing in equity, including monetising non-core assets.

"However, the company requested for some time given the prevailing circumstances. Since the equity infusion will take time, lenders advised the company to monetise the non-core assets, which was agreed to by the company as a part of de-leveraging exercise and the company was also advised to come with a definite time frame," it said.

Amid demands of change in management of the company, it said the bankers reviewed the performance and took cognisance of satisfactory operations of the company.

Meanwhile, the company informed the bankers that the professional management of the firm was still intact as on date and the operations were running normal.

Shares of Bhushan Steel on Monday closed down by 4.98 per cent at Rs.152.50 on the BSE.


Read more about: bhushan steel, syndicate bank
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