Bhushan Steel may soon be included in what could be the biggest corporate debt restructuring programme, as part of the scheme for sustainable structuring of stressed assets (S4A). Previous month the final proposal was submitted for S4A.
Bhushan Steel has been in financial distress recently. State Bank of India (SBI) and Punjab National Bank (PNB) are the major lenders to the company. Majority of the term loans have been disbursed by SBI, whereas, the working capital loan was given by PNB.
As Of 2015-16 the company had Rs 44,477.90 crore debt on books with Rs 10,000 crore being added in past three years as interest and penal interest.
Under S4A scheme, banks need to establish by a process that involves a forensic audit that the promoters are clean and not involved in any activity of malfeasance.
S4A cannot be implemented if the audit report suggests problem with the promoters. In such cases where wrong doing is seen on the part of promoters, the S4A can be implemented only when there is a change in ownership.