(ATF) Indian steel giant JSW Steel is reportedly examining a bid for embattled Liberty Steel in Britain as well as mills elsewhere, as its Indian-born founder Sanjeev Gupta’s global commodities empire totters on the brink of collapse.
JSW’s interest, which extends to plants including Gupta’s Adhunik steel mill in eastern India, could mark yet another chapter for Britain’s steel industry, which has been privatised and sold to overseas buyers as its pre-eminence slid in lock-step with the country’s manufacturing might.
According to a Reuters report on Saturday, the Mumbai-headquartered JSW Steel was considering an offer, but stressed that no final decision had yet been taken on whether to bid.
But for British businessman Gupta scrambling to refinance his global commodities empire after his go-to source of funding British supply chain finance firm Greensill filed for insolvency in March, a sale could come as a saviour.
In his heyday, Gupta was lauded as a steel magnate in Britain who bought distressed assets in economically deprived areas. His group has 35,000 workers, including 5,000 in Britain, and annual revenues of $20 billion.
Now though, after Britain’s Serious Fraud Office said this month that it was investigating Gupta’s businesses, including their links to Greensill, potential suitors have started circling his assets.
Gupta’s sprawling network of businesses include hundreds of privately held companies with interests spanning steel, aluminium, mining, financial services and real estate, built up over years of acquisitions.
POLITICALLY SENSITIVE
Since the collapse of Greensill, which triggered a major lobbying scandal involving former Prime Minister David Cameron, fears have been growing over the future of Liberty Steel too, which employs about 3,000 people in the UK.
Ministers have said they will not step in until Gupta has finished his attempts to refinance the firm.
But any change of ownership of Liberty Steel is likely to be politically sensitive.
Darren Jones, who chairs the UK parliament’s business, energy and industrial strategy committee, said he expected any buyer to require ministerial clearance.
“Steel production can also be considered to be an important part of our economic resilience and national security,” he said.
The government said it was “closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions”.
Private equity investor Endless and China’s Jingye Group, which owns British Steel, were also interested in Gupta’s business in Britain, said Reuters.
Separately, commodity trader Trafigura has expressed an interest in investing in Gupta’s aluminium smelter at Dunkirk in France, which is Europe’s largest, said reports.
BREXIT ISSUES
Although JSW Steel, part of the metals-to-cement conglomerate JSW Group controlled by billionaire Sajjan Jindal, was interested in bidding according to Reuters, obstacles exist to any deal, including navigating the fallout from Brexit as well as India’s coronavirus crisis.
And no final decision had been taken on whether to bid for what the source described as a “surprise package”.
“The due diligence has not yet started. After Brexit, it will not be easy to operate these assets,” a Jindal source told Reuters.
However, in a statement on Saturday, JSW Steel said its focus remained in India for now and it was not looking at acquiring any overseas assets.
The JSW Group’s foray into steel manufacturing began in 1982, when it set up the Jindal Iron and Steel Company with its first steel plant near Mumbai.
The next two decades saw significant expansion and several acquisitions, following the merger of Jindal Iron and Steel Co (JISCO) and Jindal Vijayanagar Steel Ltd (JVSL) in 2005.
Today JSW Steel has plants in six locations in India — Vijayanagar in Karnataka, Salem in Tamil Nadu, and Tarapur, Vasind, Kalmeshwar and Dolvi in Maharashtra.
JSW’s global spread so far is limited to a plate and pipe mill in the US, and a few mining assets in Chile, USA and Mozambique that JSW says it had acquired to “securitise resources.”
While, capacity utilisation of JSW’s USA unit in Baytown, Texas, was hovering around 40% for almost a decade, according to the company, following a spate of modernisation, the unit is now gearing up for over 80% capacity utilisation from the June quarter of the financial year 20210-22.
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