Electrosteel Steels has got a 90-day extension from the National Company Law Tribunal (NCLT), and it is with effect from January 17, 2018. According to the Insolvency and Bankruptcy Code rules, an application for an approved resolution plan has to be filed with the NCLT within 180 days, and can be extended by another 90 days.
Resolution plans, however, could be accepted even beyond the deadline.
With Electrosteel Steels, two of the five steel companies
on the RBI’s list of 12 have crossed the deadline for submitting resolution plans, the first being Monnet Ispat & Energy. Monnet, however, had received a single bid from JSW Steel.
Among those who had submitted an expression for interest for Electrosteel Steels were Srei Infrastructure Finance and Mesco Steel, apart from Tata Steel, Vedanta, Edelweiss ARC and Renaissance Steel India. Sources indicated that even Liberty House was interested. Asked whether Liberty House had submitted a resolution plan, a spokesperson said, “At this point, we don’t have anything to say.”
Hemant Kanoria, chairman of Srei Infrastructure Finance, said it was not putting in a bid for the company. Srei has an exposure of Rs 3-4 billion in Electrosteel.
Electrosteel Steels has a debt of about Rs 102.88 billion from a consortium of banks. A number of stumbling blocks had tripped Electrosteel Steels, such as delay in commissioning, which increased the project cost by 20 per cent.
Electrosteel has a planned steelmaking capacity of 2.51 million tonnes and a commissioned capacity of 1.5 million tonnes.
Banks had supported the company largely due to raw material linkages. Electrosteel Steels was promoted by Electrosteel Castings, which had secured Parbatpur coal mines, having reserves of 231 million tonnes. Plus, it had an iron ore mine and a non-coking coal mine in Jharkhand.
Electrosteel Steels was to source iron ore and coking coal from Electrosteel Castings for a period of 20 years. But the coal blocks of Electrosteel Castings were de-allocated in 2014, forcing Electrosteel Steels to buy raw materials from the market at high prices, even as prices for the product witnessed a crash.
Electrosteel was one of the first companies
for which lenders had applied strategic debt restructuring when the RBI came up with the mechanism to tackle bad loans. Incidentally, Tata Steel was one of the front runners when the company was initially put on the block.