* Bhushan Steel says to date there is no bad loan
* Meeting with lenders on Aug. 18 - finance director
* Banks supporting company so far - finance director
(Adds details, context, quote from lender)
By Krishna N Das
NEW DELHI, Aug 12 India's Bhushan Steel Ltd
, a debt-ridden company whose managing director was
arrested last week in a bribery case, has so far been able to
service its loans, its finance director told Reuters on Tuesday.
The Central Bureau of Investigation (CBI), India's top
crime-fighting agency, arrested Sudhir Kumar Jain, chairman of
state-run lender Syndicate Bank Ltd this month over
allegations he took bribes to grant loan extensions to Bhushan
Bhushan Steel said last Thursday that Managing Director
Neeraj Singal had surrendered to the CBI to assist the
investigation, which has shed light on the dubious lending that
has weakened the balance sheets of India's state banks.
Family-controlled Bhushan Steel, which has its main
operations in the eastern state of Odisha, owes net debts of
$5.86 billion - eight times its equity market value of $732
million. It denies any wrongdoing in the bribery case.
"As of date, there is no bad loan," Finance Director Nittin
Johari said. "We are in talks with the banks."
Johari said he expected clarity after a meeting of lenders,
including Punjab National Bank (PNB) and the State
Bank of India (SBI), on Aug. 18.
"All depends upon the banks, what they decide, how they are
going to support. Because everything is not on the company's
hands," Johari said by phone. "They are supporting the company
but let's see. After the meeting everything is going to be
Shares in Bhushan Steel, founded in 1989 by Brij Bhushan
Singal and run by son Neeraj since 2002, have lost more than
half of their value since Jain's arrest.
Separately, Bhushan Steel said on Tuesday it had posted a
quarterly loss and that its board had approved the issue of
securities to raise up to $1 billion.
The finance ministry estimates that India's dominant state
banks will need $40 billion in fresh capital by 2018 to meet
international capital adequacy standards.
A committee appointed by the central bank in May called
corruption in state banks a major "public policy concern", and
recommended the federal government cut its stake in these banks
to below 50 percent.
Total bank exposure to Bhushan Steel is about 400 billion
rupees ($6.5 billion), according to top Indian lender SBI, which
has proposed to the lenders' consortium that a management agency
be appointed to oversee the company's operations.
Johari said teams were in place to run the company along
with founder chairman Brij Bhushan Singal.
About $386 million of its total debt matures this fiscal
year ending March 31 and $460 million in the next fiscal year.
The company has been in the news for various accidents at
its main 3 million-tonne-per-year steel plant in Odisha. At
least 72 people have died in accidents since the commissioning
of the plant in August 2006, according to a state regulator.
SBI Chairwoman Arundhati Bhattacharya has said, however,
that the plant is in good order.
"At least all of our lenders, engineers and other experts on
our panel who have visited have confirmed that the asset is a
very good quality asset," Bhattacharya said last week.
"It is currently running properly also. We don't want
therefore for it to run into any kind of trouble and create
trouble for our exposure."
(1 US dollar = 61.1225 Indian rupee)
(Additional reporting by Sumeet Chatterjee and Devidutta
Tripathy in Mumbai and Jatindra Dash in Bhubaneswar; Editing by
Douglas Busvine and David Clarke)