Banks may seek more bids for Essar Steel loans COMPANY FINANCIALS AT A GLANCE

Essar Steel’s lenders may seek more bids from asset reconstruction companies to secure a better price for their exposure to the ailing company.

Banks with loan exposure of over ~40,000 crore to Essar Steel have received a proposal from SSG Capital to buy the debt at half the price. SSG Capital has a controlling stake in Delhi-based Asset Care and Reconstruction Enterprise.

An executive with a Mumbai-based public sector bank said Essar Steel was facing tough times but it was still an operating unit with substantial value.

The price offered by one party could become the basis for calling expressions of interest from other bidders, the executive added.

Early this month, the Reserve Bank of India released rules for banks to use the Swiss challenge method to sell dud loans, where a lender that receives an unsolicited bid for an asset invites other parties to match it.

A slew of steps by the government, including a minimum import price, to curb dumping of steel has helped steel companies to improve their financial profile. This is expected to put them in a better position to repay their loans.

Essar Steel had been looking for a buyer since November. However, with China dumping steel in all parts of the world, including India, the company so far has failed to receive a single bid.

In a recent development, Mumbai-based Edelweiss Asset Reconstruction Company bought ~ 1,600 crore of ICICI Bank’s loans to Essar Steel.