Bhushan Steel may sell stake to Sumitomo

November 25, 2009: Delhi-based Bhushan Steel may look at doing a JSW Steel-JFE-like deal with Japan's Sumitomo Metal Industries.

Sources said Bhushan might explore offloading around 2.1 million shares of its 42 million shares to Sumitomo. This was in addition to the joint venture opportunity being explored for the six-million-ton Bengal steel project.

However, Neeraj Singal, managing director of Bhushan Steel, said nothing had been finalised for the Bengal project and a decision would be taken by the end of December. Asked if it included a larger plan of offloading a 5 percent stake in Bhushan Steel, Singal said: "That is not part of the discussion now."

Sources said Bhushan was also talking to financial institutions for the 5 per cent stake, but Sumitomo was the only metal player in the fray. "We have a relationship with Sumitomo since 1994," said sources. A formal proposal from the Japanese company was still awaited.

Sumitomo is also a technical partner for Bhushan Steel's Orissa project, where the company has a three million ton plant and would be increasing capacity to six million tons by 2012.

If the deal with Sumitomo for Bhushan Steel materialised, then it would be the second Indian steel company to go for such a deal with a Japanese company. Recently Sajjan Jindal-controlled JSW Steel announced a collaboration with JFE Steel Corporation, the world's sixth largest steelmaker, for a manufacturing and mutual shareholding agreement. However, Bhushan's deal was unlikely to have a mutual shareholding arrangement.

Source: Business Standard