The process of selling a majority stake in Monnet Ispat and Energy Ltd (MIEL) is likely to be over by the end of the current financial year, Sandeep Jajodia, the company’s chairman and managing director, says in an interview. Debt-ridden MIEL is undergoing a strategic debt restructuring (SDR), after which it will see a new promoter. JSW Steel Ltd is the sole bidder, though private equity firm Blackstone and Sudhir Maheshwari-led Synergy Capital also had talks with the lenders. Blackstone already holds a small stake in Monnet Ispat. Excerpts:
What is the update on SDR process?
About a year ago, six parties expressed interest but we got only one bid from Synergy Capital, a London-based company. The bankers re-invited expression of interest (EoIs) after close to nine months. Four companies submitted EoIs, but in the end only JSW Steel placed bids.
Are reports about lenders finalising the JSW Steel offer true?
I have not heard about any such meeting. Now that the bid is in place, bankers have adopted an open and transparent process. In case of Monnet Ispat, it is the second part of the overall bid process. I think the bankers should try to negotiate with the bidder and decide the fate of the company as quickly as possible.
By when do you expect stake sale to be over?
It’s difficult to say as it is a process which bankers have to do. I do not know how quickly they can take a decision. And then every bank has to seek its board’s approval. I hope it would be done by 31 March… failing which, it should be done by 15 April.
What pragmatic solution do you see to address the NPAs issue being faced by domestic steel companies?
Investors are very afraid of taking decisions on proposals because they fear coming under the scanner. That is a very bad thing and needs to be addressed by the government. All over the world, if there are any issues related to NPAs, the banks and the borrower sit across the table and take a decision on the time period required for repayment. And those decisions are respected by the system. This is the only way to resolve issues. It has to be based on merits of that specific case and based on commercial decision.
I think today we have a very serious issue about NPAs in our country because of slow decision making process in the last 4-5 years and economic factors have also changed… Labour problems have also been on a rise… now promoters are unsure and losing interest in running these companies and the asset quality is deteriorating.
What is the current debt on the company’s books?
Monnet Ispat has a total debt of about Rs.8,900 crore, including interest till March 2017 and all penalties paid for coal mines.
What is the update on coal mines you bagged in auctions?
Coal blocks linked to Monnet Power are under litigation. We have applied for the mine which we got for Monnet Ispat. We have also given a bank guarantee of Rs.329 crore and will soon start mining. There are some issues which government needs to sort out… post tender, boundaries of the coal mine were changed and the new boundaries are in forest area. We have objected to that.
Is domestic steel market witnessing a recovery?
After the imposition of minimum import price and anti-dumping duties, steel prices have definitely gone up. But the prices of raw material have also gone up. Today, we are more bothered about the lack of demand. The companies need to run at 100% capacity and lack of demand is worrying us.
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