A consortium of lenders led by Punjab National Bank (PNB) would appoint three nominee directors on Bhushan Steel’s board to represent lenders. Besides, an independent engineer would closely track the company’s manufacturing operations and expansion activities.
Bankers have also ordered a forensic audit into the accounts and audit books of the company and has asked promoters to inject more money to remain solvent.
Forensic audit of companies’ accounts is carried out as part of investigations in cases of suspected financial irregularities.
The decision was taken during a meeting held in the Capital on Monday to take stock of the situation following the arrest of Bhushan Steel vice-chairman and MD Neeraj Singal by the CBI in an alleged cash-for-loan scam involving Syndicate Bank chairman SK Jain.
The audit firm would examine whether there was any diversion of funds and also monitor the cash flow on daily basis.
A Bhushan Steel spokesperson could not be immediately contacted.
About 51 banks have a total exposure of Rs. 40,000 crore in Bhushan Steel.
“There was a lenders’ meeting of Bhushan Steel Ltd that took place… During the meeting the company presented the current status of operational performance, organisational setup and details of key management personnel,” PNB said in a statement.
Bankers also asked the company to bring in more equity, while 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 a deleveraging exercise and the company was also advised to come with a definite time-frame,” the statement added.
The company has informed the bankers that it operations were running normally and the professional management of the firm was still intact.
State Bank of India chairperson Arundhati Bhattacharya had earlier said the lender was keen on an external agency to take over the day-to-day management of the company. SBI has an exposure of about Rs. 6,000 crore in Bhushan Steel.
Bhushan Steel shares fell 5% on the BSE on Monday. Since the bribery allegations came to light in early August, the stock has lost more than 60% of its value.