 "Synergy Capital eyes Monnet Ispat controlling stake")
"Preliminary discussions between London-based Synergy Capital Corp and bankers are on, and something could materialise by the end of the month. It is possible that a couple of other investors could join hands with Synergy Capital Corp," a top Monnet official said.
When contacted, Maheshwari said, "I am unable to comment on market rumours."
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Lenders and the existing management of Monnet could be banking on Maheshwari's vast experience in turning around the companies.
Maheshwari had spent 27 years with ArcelorMittal, where he was a member of the group management board, alternate chairman of the corporate finance and tax committee and the chairman of the risk management committee.
He also managed Mittal Investments from 2008 to 2015 and then went on to set up Synergy Capital Corp LLP.
According to Synergy Capital's website, apart from advising clients on debt and corporate finance, it develops and invests in proprietary investment opportunities on a case-to-case basis and also introduces co-investors.
Monnet ran into a huge debt and in August 2015 lenders had invoked SDR. SDR was introduced by the Reserve Bank of India in June 2015 to tackle bad loans, by allowing banks to acquire control of a defaulting company by converting the loans into equity. That was to be followed up by bringing in new promoters after which sticky assets were to be upgraded to standard ones.
A Religare report from January 2016 said Monnet Ispat's debt had increased from Rs 8,606 crore in FY13 to Rs 12,499 crore in FY15.
Lenders currently control 51 per cent of the company, and according to the shareholding pattern filed with the BSE, promoters hold 25.27 per cent, as on June 2016.
The Religare report had indicated that to attract new buyers, lenders would have to take a haircut of 84.5 per cent.
Monnet Ispat, the flagship company of the Monnet group, and the second largest coal-based sponge iron producer, was one of the affected companies when the Supreme Court de-allocated 214 coal blocks in 2014. Monnet had five coal mines.
Its facilities are based in Raipur and Raigarh. From a sponge iron player, Monnet Ispat had transformed to a steel maker by commissioning a plant at Raigarh in FY14. The operating mine close to Raigarh provided the plant coal.
"The Raipur plant is running at 80-90 per cent capacity utilisation now while the Raigarh plant is running at 30-35 per cent," the Monnet official said.
However, with policy support - safeguard duty, minimum import price and provisional anti-dumping duty - from the government over the past year, and an increase in international prices, the company is hopeful of turning Ebitda positive.
"Even with the current capacity utilisation levels, we will be Ebitda positive," the Monnet official said while adding that there is a working capital requirement of Rs 100-200 crore.
Monnet Ispat's losses have come down quarter-on-quarter. For the June quarter, Monnet Ispat posted a net loss of Rs 358.73 crore on revenues of Rs 420.62 crore compared to a net loss of Rs 434 crore on revenues of Rs 378.87 crore at the end of March.