Visa Steel, which went into a corporate debt restructuring (CDR) programme two months ago, is looking for a strategic investor in its core long steel business.
Vishal Agarwal, managing director, Visa Steel told Business Standard, “In the special steel business we are open to the idea to have a strategic investor.” He did not give details but said that the company will evaluate as it goes forward.
According to company and industry sources, since Visa Steel’s problem is because of shortage of iron ore, the company is looking to align with an iron ore company so that it could secure raw material supplies.
At a board meeting held on September 28 the company considered and approved its financial restructuring plans as per the package approved by its CDR Empowered Group. Agarwal said that the company has Rs 2000 crore worth of long term debt which it is trying to rework.
The impact on this restructuring can be seen on the company’s other expansion projects. Agarwal said, “Currently the challenge is to resolve the iron ore issue around the existing steel business before it looks at new capacities.”
The company had plans of doubling its half a million tonne capacity plant in Odisha which is now under the clouds. Apart from this, Visa planned to set up a 2.5 million tonne steel plant and a 500 MW power plant at Raigarh, Chhattisgarh. The company has already acquired 280 acres of land out of the total need of 1000 acres and the plant has got the environmental clearances. It had also announced setting up a 1.25 million tonne steel plant with a 1 lakh tonne manganese alloy plant and a 300 MW power plant in Madhya Pradesh.
Currently, Visa Steel has a fully integrated half a million tonne special steel plant in Odisha. The plant includes a 4 lakh tonne coke oven plant which was hived off in a company called Visa Coke Ltd and just last month it sold 49 per cent stake in this hived-off company to New York-listed SunCoke Energy for Rs 368 crore.
The company has three main businesses, the ferrochrome business, coke oven battery and special steels.
In ferrochrome, Visa Steel has a joint venture with BaoSteel of China called VISA BAO Ltd. The two are setting up a 100,000 tonne per year ferrochrome plant in Odisha wherein Visa Steel holds 65 per cent stake and Baosteel holds the remaining.
The plant was expected to be operational by June 2012 but is now delayed. Agarwal said that it should be commissioned by March 2013.
In its coke business, it sold 49 per cent to SunCoke in November. In its core business of special steel the company is now looking for an investor.
In the second quarter of this fiscal, the company suffered a loss of Rs 36.73 crore which was preceded by a Rs 108.67 crore loss in the first quarter. In FY 11-12, the company posted a net loss of Rs 118.85 crore.