The Rs 170 crore Tinplate Company of India (TCIL), a subsidiary of Tata Steel, has drafted a three-pronged strategy to bounce back into the black in the next one year.
The company has decided to improve operations and marketing efficiencies, reduce workforce and restructure its debt.
B L Raina, managing director, said, "We have taken three major initiatives primarily to set the fundamentals right. As the first step we have rightsized our company and have closed the hot-dip plant which was unviable." The employee strength, which stands reduced at 1,810 from 5,000, is likely to be pruned to below 1,000 over two years.
The management has also approached the financial institutions with a debt restructuring (phase II) package, requesting a reduction in interest rate. "Though we are generating satisfactory gross profits, 65 per cent of it goes towards interest charge. We are expecting to drive down our average cost of borrowing between 12 per cent to 13 per cent from the current level of 17 per cent," Raina said. However, the financial institutions are yet to respond to the proposal.
The total debt in TCIL is around Rs 205 crore and the payments towards interest charges in the last fiscal was close to Rs 37 crore. The phase-I of the company's debt restructuring entailed conversion of long-term debts into optionally convertible preference shares.
The third initiative, Raina said, was towards improving operational and marketing efficiencies.
"We would be scaling up our tinplate manufacturing capacity from 90,000 tonne to 110,000 tonne by April, through debottlenecking and an additional investment of Rs 9 crore," Raina said. Currently, the company exports 20 per cent of its production.
Tata Steel, the promoter of TCIL, holds around 31 per cent and the institutions holds 35 per cent and the balance is held by the public.
