Lenders to Bhushan Steel Ltd have decided to conduct a forensic as well as a concurrent audit to monitor the company’s cash flows as they move to protect their interests in the company.

The bankers have also decided to appoint three nominee directors on the board of Bhushan Steel to represent the lenders. The lenders will also appoint a lenders’ independent engineer to monitor the operations of the company and the projects.

Lenders have asked the company to reduce debt and bring in more equity. The company was also asked to monetize its non-core assets as part of the deleveraging exercise.

The consortium of lenders along with officials of Bhushan Steel met in New Delhi on Monday to chart out the future course of action after Bhushan Steel’s vice-chairman Neeraj Singhal and Sydicate Bank chairman and managing director S.K. Jain were arrested earlier this month by the Central Bureau of Investigation (CBI) in a loans-for-bribes case.

A consortium of 51 lenders has an exposure of around Rs.40,000 crore to Bhushan Steel. Bhushan Steel, the sixth largest Indian steel maker by capacity, produces about 2.2 million tonnes (mt) of mostly flat steel products with plants in Uttar Pradesh, Odisha and Maharashtra.

Bhushan Steel was represented by Brij Mohan Singhal, the chairman of the company and the company’s chief financial officer in Monday’s meeting. The company is said to have assured bankers that it is financially stable and that there is no cause for worry.

Big lenders such as State Bank of India (SBI) and Punjab National Bank (PNB) have also asked for representation on the board of the steel company, one of the bankers who attended the meeting said.

Lenders were considering appointing a management agency to focus on the Odisha unit of Bhushan Steel in Dhenkanal, Arundhati Bhattacharya, SBI chairman had said earlier adding that the bank had an exposure of around Rs.6,000 crore but that there was no fear of it turning into a non-performing asset. (Live Mint)