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Tata steel wants to bid afresh for Electrosteel on MAT relief

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Source: The Economic Times
Saturday, January 27, 2018

 MUMBAI: Tata Steel has sought an opportunity to bid afresh for bankrupt Electrosteel Steels on the ground that clarity had emerged regarding taxes to be paid on acquiring a stressed asset subsequent to the deadline for submissions having passed, said two persons with knowledge of the development. 


ET reported on January 9 that Anil Agarwal's Vedanta Resources had submitted the highest bid pegged at about Rs 4,500 crore compared with the Tata Group's Rs 3,500-crore offer. 

The latest move by Tata, suggesting it could raise its bid, followed a clarification issued by the Central Board of Direct Taxes (CBDT) on January 5, a day after the deadline for Electrosteel bids. 
Lenders are debating whether a new round of bids can be called, said the people cited above. 

"The amount of total loss brought forward (including unabsorbed depreciation) shall be allowed to be reduced from the book profit for the purposes of levy of MAT (minimum alternate tax) under Section 115JB of the Act," CBDT had said. 
 
This alters calculations, Tata told the resolution professional (RP) Dhaivat Anjaria, said the people cited above, who have seen the letter. 

No Precedent 
Tata indicated it will be in a position to improve upon its earlier offer but didn't provide any further details, they said. 

"In a letter to the resolution professional, TV Narendran, managing director of Tata Steel, had requested that rebidding be done for Electrosteel Steels because of new developments, which changes the matrix of the pricing of the distressed company," said one of the persons. 

A Tata Steel spokesperson told ET in an email: "We are abiding by the process as laid out by the resolution professional and we don't want to comment on the process or any specific issues raised by you at this stage." 

Anjaria did not respond to queries. He had set a deadline of January 4 for binding bids for Electrosteel. 

The letter has been passed on to the committee of creditors, which met on Tuesday to discuss whether there was a case for fresh bids being called. 

Given that there is no precedent, "the lenders will have to apply their mind on the matter," said a bank official who attended the meeting but did not want to be named. "As a bank, I am interested in getting most of my money back in the shortest possible time and with the least amount of haircut." 

Electrosteel Steels has dues of about Rs 13,600 crore. It has a planned steelmaking capacity of 2.5 million tonnes and a commissioned capacity of 1.5 million tonnes. 

The clarification should help successful buyers save on MAT. "According to the industry players, the revised rules on MAT are a game changer, paving the way for improving the offer price," said one of the persons cited above. 

Tata Steel is among four contenders for Electrosteel Steels. Apart from Vedanta, the other bidders were Renaissance Group and a fund backed by Edelweiss Group, ET had reported earlier. The offers made by Renaissance and Edelweiss could not be verified. 

Electrosteel Steels is one of the 12 companies that the Reserve Bank of India directed banks in June 2017 to refer to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). Of these 12 companies, apart from Electrosteel Steels, binding bids have been submitted for Monnet Ispat and Jyoti Structures. There was one bidder for each of them — JSW-AION for Monnet Ispat and Netmagic founder Sharad Sanghi for Jyoti Structures. 


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