Owed $6 bn, banks sharpen scrutiny of Bhushan Steel

The creditors of Bhushan Steel Ltd will take steps including an audit to ensure the steelmaker, whose managing director is implicated in a bribery case, will be able to pay around $6 billion it owes.

The creditors, which include the SBI, will also appoint three directors to Bhushan Steel’s board, Punjab National Bank, which leads a group of lenders, said in a statement.

The CBI, this month detained Bhushan Steel’s MD over allegations of offering to bribe a senior executive at the Syndicate Bank Ltd in exchange for loans. Syndicate Bank Chairman Sudhir Kumar Jain has also been detained.

Family-run Bhushan Steel has denied any wrongdoing and said it has so far been able to service loans.

Lenders found Bhushan Steel’s operations “satisfactory”, according to the statement. However, as a “corrective action plan” the banks would appoint a top auditor to conduct a “forensic audit” of Bhushan, and another to monitor its cash flow on a daily basis.

The lenders will also appoint an engineering firm to monitor the operations of Bhushan and projects under expansion.