Visa Steel, which went into a corporate debt restructuring (CDR) programme two months ago, might try to bring in a strategic investor in its core long steel business.
Vishal Agarwal, managing director, 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 the company would evaluate as it goes forward.
According to company and industry sources, the company is looking to align with an iron ore company, so that it could secure raw material supplies, given the shortage of it in the market.
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At a board meeting on September 28, the company considered and approved a financial restructuring package finalised by its CDR Empowered Group. Agarwal said the company had Rs 2,000 crore of long-term debt, which it was trying to rework.
The impact can be seen on the other expansion projects. Agarwal said, “Currently, the challenge is to resolve the iron ore issue around the existing steel business before looking at new capacities.”
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Earlier, the company had plans of doubling its 500,000-tonne capacity factory in Odisha. It had also planned a 2.5-million tonne steel plant and a 500 Mw power plant at Raigarh, Chhattisgarh. It had acquired 280 acres of the 1,000 acres needed and the environmental clearances. It had also announced setting up a 1.25-mt steel plant, with a 100,000 tonne manganese alloy plant and a 300 Mw power plant in Madhya Pradesh.
Currently, Visa Steel has a fully integrated 500,000 tonne special steel plant in Odisha. The plant includes a 400,000-tonne coke oven plant, hived off in a company called Visa Coke Ltd. 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 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 holds 65 per cent and Baosteel the rest. The plant was expected to be operational by June this year. Agarwal said 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 financial year, the company suffered a loss of Rs 36.7 crore, preceded by a Rs 108.7 crore loss in the first quarter. In 2011-12, it posted a net loss of Rs 118.9 crore.