Having failed to elicit any interest for the heavily-indebted Gujarat NRE Coke’s 87.5 MW windmill assets, SBI Capital Markets (SBI Caps) has extended the deadline for submitting bids till April 4, persons familiar with the deve- lopment confirmed to FE.
The reserve price for the sale has been fixed at R299.6 crore and March 19 had been set as the last date to deposit the final binding offer and contract performance guarantee (CPG) of R10 crore.
Gujarat NRE owed banks R3,011 crore, at the end of March, 2015 an increase over the R2,726 crore in the previous year. Lenders to the loss-making firm, whose debt- equity ratio at the end of March 2015 was 6.71—are trying to sell non-core assets to recover their dues. The consortium led by State Bank of India (SBI) has mandated SBI Caps to find a buyer for the company’s windmill assets in Kutch and Jamnagar. In Q3 FY16, the company posted a loss of R301 crore on the back of R142 crore in revenues after paying interest costs of R85 crore.
Arun Kumar Jagatramka, chairman and MD, Gujarat NRE Coke told FE the company had tried to sell the asset last year but the highest bid had come in at R218 crore.
“When we went to the lenders they said they wanted to try and get a higher price,” Jagatramka said. He added that with the steel and auto industries looking up, it was possible lenders would get a better price.
The Gujarat NRE group has presence in diversified sectors including power, steel and metallurgical coke. The company has capacity to produce 1.458 million tonnes per annum (MTPA) metallurgical coke (met coke). Following a CDR (corporate debt restructuring), the company is in the process of merging its group companies – NRE Metcoke Limited and Bajrang Bali Coke Industries Limited with itself – and the scheme has been approved by the Calcutta High Court.
In 2014, lenders had approved a CDR allowing repayments to be spread over 10 years with a two-year moratorium on payments. The company had also received an additional working capital up to Rs 370 crore.
The Indian met coke industry is battling twin odds of low domestic demand and the onslaught of cheap imports. The dwindling demand from the steel Industry, the main user of metcoke, has also impacted the company. JP Morgan analysts said in a report in January that CY15 was among the worst years for the Indian steel industry as both local and global problems converged with the situation so bad that most of the steel industry made losses even at the EBITDA level. “Investors exited the sector, which led to asset valuations dropping to multi-year lows,” the report said.