JVSL promoters get breather from creditors, suppliers

Suresh Nair

Mumbai, Oct 8: The promoters of Jindal Vijayanagar Steel Ltd (JVSL) can now heave a sigh of relief. The creditors of the company have agreed to wait a little longer for their dues, pegged at Rs 108 crore. The creditors include capital creditors, equipment suppliers and construction contractors.

The company will continue to maintain its outstandings at the same levels although it may not be able to pay off creditors immediately.
JVSL promoters had committed to financial institutions their intent to pump in funds to the tune Rs 108 crore by the end of September 30, 2001, for credit outstanding, but were unable to do so.

According to the new plan, the company will rather use the amount for its business needs, with a view to easing the company’s financial crunch. The cash was to be generated through internal accruals.

JVSL director (finance) Sheshagiri Rao said: “We will not block any of the payments, but the money will be rolled back into the business.” Our position is improving now, he added.

Mr Rao said added that the company is optimistic and that it can pay up the amount as it already has a positive operating profit. JVSL, due to non- implementation of the restructuring package by lenders, had for the first quarter ended June 30, 2001 posted a net loss of Rs 133.26 crore.

This would have otherwise been lower at Rs 102.33 crore, against a net loss of Rs 25.39 crore in the corresponding period of the previous fiscal.

Mr Rao said the pending package had been sanctioned by lenders including IDBI, IIBI, IFCI, ICICI, LIC and GIC. However, he confirmed that SBI and UTI are yet to sanction the restructuring package.

The company expects the sanctions from UTI and SBI to come in a couple of weeks, he added.

The total impact of all FIs sanctioning the restructuring package, he said, will be very positive for the company as it will stop the outflow of interest by at least Rs 200 crore.