ABSTRACT
The bad assets of banks due to the exposure to the steel industry constitutes more than 10 percent of all bad assets while the total exposure of steel to all loans is about 4.5 percent. Along with power, steel is the worst performing industry in India. In order to get an idea of the steel sector in India, this chapter presents the story of Uttam Galva, a Maharashtra-based firm for manufacturing high quality cold rolled steel. It also presents case studies of Essar Steel, Bhushan Steel, Lanco Group and Visa Steel. One observes that the bad loans of the steel companies have emanated out of the attempts of stand-alone steel plants to expand capacities to over a million tonnes and acquire facilities and iron ore mines like the integrated steel plants. The other reason for bad loans in steel plants has been their desire to acquire assets such as land for mineral properties as well as factory sites.
