The consortium of 27 lenders are ready to recast their Rs 7,000-crore loan to the troubled Kolkata-based DI pipes-maker Electrosteel Steels and the proposal may go to the corporate debt restructuring cell next month, according to a senior official of State Bank of India.
"The lenders are ready to recast the Electrosteel Steels' Rs 7,000 crore loan provided they meet our demands, which include corporate guarantees by promoters.
"Hopefully, the proposal will go to the CDR cell next month and the process will be completed towards the end of the second half, that is by September-end," a senior SBI official has told PTI, adding the bank has given more than Rs 1,000 crore to the company.
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SBI is the leader of the leader of the 27-member lenders' consortium.
Under the CDR regime, which is mechanism to help troubled companies to restructure their loans, 75% of the lenders should accept the CDR proposal.
According to the new-tightened CDR norms, the promoters seeking to recast their loans should bring in 25% of the loan amount as fresh capital infusion.
The SBI official clarified that the Electrosteel Steels CDR has been accepted by around 60% of the lenders only though a 'flash report' has been accepted by all the banks.
Apart from SBI, the other lenders to the troubled Kolkata-based DI pipes and casting manufacturer, promoted by the Kejriwal family, include Punjab National Bank around Rs 400 crore, Srei Infra about Rs 440 crore, Indian Overseas Bank has around Rs 350 crore exposure, Oriental Bank of Commerce and UCO Bank have given over Rs 300 crore each to the company.
The group flagship Electrosteel Castings is the holding company of Electrosteel Steels with 39% stake, and bankers want guarantees from this company for the CDR to go through.
According to the source, the promoters are not keen on providing corporate guarantees but are ready to offer personal guarantees.
Some of the lenders already have corporate guarantees from the flagship firm in which Kejriwals own 48% the source said, adding for the CDR process to be completed, the company must infuse some Rs 300 crore of fresh capital.
In FY13, the company had reported loss of Rs 280 crore from Rs 141 crore a year ago, while for the March quarter the net loss stood at Rs 122 crore, which was Rs 64 crore in the year-ago period.
Its Q4 sales rose to Rs 73 crore from Rs 55 crore, while for the full year, sales stood at Rs 140 crore which was more than doubled from Rs 58 crore.
The Electrosteel Group has got some coal and iron ore blocks such as the Parbatpur captive coal mine block for coking coal in Jharia Coalfields near Bokaro with reserves of 231 million tonne and an iron ore mine at Kodolibad near Barajamda and mine block for non-coking coal at Northdhadu, all in Jharkhand. It is also talking to Odisha for iron ore mines in the state, according to the company's website.
Electrosteel manufactures and supplies ductile iron (DI) pipes and fittings and is three-star export house. It was the first domestic company to set up a ductile iron pipe plant apart from pioneering manufacture of alloy steel castings in the country.
Eelctrosteel Steels is the first domestic company to be listed on the Professional Securities Market (PSM) of the London Stock Exchange in $40-million issue of global depository receipts in October 2005.
Umang Kejriwal is the managing director of Electrosteel Castings since 1981 and his younger brother Mayank Kejriwal is a joint managing director since 1981.
The company has 2.95 lakh tonne coke making facility at Haldia coke making capacity, and a 60,000 tonne sponge iron capacity apart from a 12-mw power plant, according to the company website.
Its first plant was set up at Khardah near Kolkata to make ductile iron (DI) pipes, DI fittings and pig iron. It also has a plant at Elavur in Tamil Nadu and exports its products to 35 countries in the Subcontinent, Southeast Asia, West Asia, Europe, the US, South America and Africa.