Bhushan Steel, one of the 12 large non-performing asset (NPA) cases referred to National Company Law Tribunal (NCLT) by the Reserve Bank of India (RBI) for resolution under the insolvency law, has now completed over a year under its new promoter, Tata Steel.
How has Bhushan Steel done under its new promoter? Has it been a story of a turnaround yet or is it still struggling with the legacy issues that pushed the steel firm into insolvency?
Rajeev Singhal, managing director, Tata Steel BSL, says that the turnaround of Tata Steel BSL Limited has been successful.
"All along, we focussed on overall improvement, taking the workforce of erstwhile Bhushan Steel along. In overall improvement, the emphasis has been on safety, environment and corporate social responsibility, in addition to operational and financial excellence," Singhal says.
He says that the results of financial year 2018-19 are a testimony to the overall improvement the company has been able to achieve in a short period of time. However, Singhal says the company still has some distance to cover.
Bhushan Steel's insolvency case was resolved in May 2018. In 2018-19, the company posted a loss (before exceptional items) of Rs 1,264 crore. In 2017-18, the company posted a loss (before exceptional items) of Rs 5,791 crore. Its revenues increased from Rs 17,404 crore in 2017-18 to Rs 20,891 crore in 2018-19.
In the first half of the current financial year, the company posted revenues of Rs 8,436 crore, registering a 16 per cent drop over Rs 10,071 crore in the previous year. In the first half of 2019-20, the company's net loss (before exceptional items) was 142 crore compared to net loss (before exceptional item) of Rs 773 crore during the same period a year ago.
The interest costs have come down from Rs 6,305 crore in 2017-18 to Rs 3,752 crore. In the first half of the current financial year, interest cost of the company has come down to Rs 822 crore from Rs 2,222 crore during the same period in the previous financial year.
The managing director said that as part of the synergy drive between Tata Steel and Tata Steel BSL, It has launched many products such as Tata Steelium, Tata Shaktee and Tata Kosh, expanding our customer base and driving new process and product development.
During the financial year 2018-19, the saleable steel production of Tata Steel BSL stood at 4.16 million tons that is more than 10 per cent over FY18 (3.8 MTPA). "This has been possible because of higher mill availability with improvement in maintenance practices and uninterrupted raw material supply," says Singhal.
In the last financial year, 18 per cent of its sales came from exports. According to Rajeev Singhal, the company has maintained leadership position in precision tubes sector for automotive segment with 25 per cent share of business. In Appliance sector, the company has grown its market share to around 50 per cent.
"Similarly, we increased market presence in value-added and niche products such as hardened and tempered steel, capturing close to 55 per cent of domestic market share. New segments such as solar helped grow galume sales by 70 per cent over 2017-18. Color-coated sales increased by 30 per cent through new product development such as food grade PPGI for cold storage," Says Singhal.
On the question whether there were job losses in Bhushan Steel after the acquisition by Tata Steel, Singhal said that there has been no attempt at reducing the number of employees and it has remained the same.
"Very few, about 100, have been deputed from Tata Steel," he says.