Lenders led by Punjab National Bank are beginning a dialogue with the Bhushan Steel management to ensure that their interests are secured after the arrest of the company's vice-chairman and managing director Neeraj Singal in an alleged corruption scandal involving Syndicate Bank chairman S K Jain, who is now in judicial custody.
The move comes even as lenders are meeting on August 18 to decide on the future course of action after State Bank of India chairman Arundhati Bhattacharya suggested last week that a management agency could be brought in to oversee the day-to-day running of the entity. Bankers, however, said they needed to have a dialogue with the company since the chairman and founder Brij Bhushan Singal had nothing to do with the scandal that has rocked the sector and a professional management was in place. They said that the management's involvement was critical to ensure that the company was not adversely impacted by the current controversy. Bhushan Steel's shares fell another 10% to Rs 197 and hit the lower circuit limit on the Bombay Stock Exchange. The scrip has plunged 48% in four trading sessions, with the market capitalization down Rs 4,152 crore to Rs 4,472 crore.
Bhattacharya had said, that considering Bhushan Steel is a listed company, the lenders can't ask the management to move out.
"We will try to bring in a management agency, which will look at the day-to-day running of Bhushan Steel. This is a very good quality asset, it is running properly and we don't want it getting into any kind of trouble," she had said.
Bank executives said there are several independent directors including B B Tandon, a former chief election commissioner, V K Mehrotra, a former deputy MD of SBI, and M V Suryanarayana, a former executive director of LIC were on the company's board. In addition, LIC had a nominee in Sunita Sharma on the Bhushan Steel board.
Source: The Times of India
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