Bhushan Steel
Bhushan SteelReuters

Creditors of Bhushan Steel Limited are set to audit and investigate the steel maker's administration with the help of engineering and auditing firms.

The consortium of banks led by Punjab National Bank said that auditors will monitor the company's cashflows on a daily basis and a forensic audit will be conducted.

Neeraj Singhal, vice chairman and managing director of the company is implicated in a bribery case and reportedly owes $6 billion to creditors like State Bank of India and Punjab National Bank with other lenders.

The step taken by the group of banks is followed by the arrest of Singhal, who has been taken into custody in connection with an alleged ₹50 lakh bribery case involving Syndicate Bank chairman S K Jain.

Family-run Bhushan Steel has refuted any wrong doing and said that it has so far been able to service loans.

Lenders found Bhushan Steel's operations "satisfactory", according to the statement. However, as a "corrective action plan" the banks would appoint a top auditor to conduct a "forensic audit" of Bhushan, and another to monitor its cash flow on a daily basis, reported Reuters.

Incorporated in 1989, Bhushan Steel reported net loss of ₹19.57 crore in Q4 March 2014 against its net profit of ₹280 crore in Q4 March 2013. Net sales plunged 10.9 percent to ₹2,399.73 crore in Q4 March 2014 over Q4 March 2013.

Under performer

Its stock price on Tuesday slipped to a 52-week low during trading hours in the afternoon. At 3 pm, the stock was trading at ₹144.90.

However, the stock ended 4.98 percent lower recording at ₹145.

On the first week of this month, Bhushan Steel shares fell 20 percent lower on 6 August following the arrest of Syndicate Bank chairman Jain, who was caught for demanding bribe to enhance the credit limit of Bhushan Steel and Prakash Industries.