Adhunik Metaliks owes Rs 4,466 cr, opts for SDR scheme, to swap debt for equity

By: | Published: August 30, 2016 6:36 AM

Lenders to the loss-making Adhunik Metaliks — the flagship company of Kolkata-based Adhunik Group — have decided to convert a fairly large portion of the company’s debt into equity.

The firm owes lenders a consolidated R4,466 crore and the loans were restructured by the corporate debt restructuring cell on March 18, 2015.(Reuters)The firm owes lenders a consolidated R4,466 crore and the loans were restructured by the corporate debt restructuring cell on March 18, 2015.(Reuters)

Lenders to the loss-making Adhunik Metaliks — the flagship company of Kolkata-based Adhunik Group — have decided to convert a fairly large portion of the company’s debt into equity. This would be in line with the strategic debt restructuring (SDR) scheme.

The firm owes lenders a consolidated R4,466 crore and the loans were restructured by the corporate debt restructuring cell on March 18, 2015.

Senior bankers indicated to FE the company had been also sounded out by two Chinese firms for an equity stake.

Adhunik reported a net loss of R464 crore in 2015-16 on the back of R668 crore in revenues; it paid out R380 crore by way of interest. Bankers to the company include Allahabad Bank, Bank of Baroda, Bank of Maharashtra, Corporation Bank, HDFC Bank, ICICI Bank, Indian Overseas Bank, Punjab National Bank, State Bank of India and its subsidiaries, among others.

A senior banker told FE the Orissa High Court was shortly expected to decide on the merger of Adhunik Metaliks and Zion Steel with Orissa Manganese & Minerals (OMML).

The merger would result in both iron ore and manganese being mined in the same company. “We are hopeful the company’s cash flows will improve owing to better availability of raw materials,” the banker said.

In 2013, the board of Adhunik Metaliks approved a new structure for the company such that Zion Steel — the promoter group company — would be merged with Adhunik Metaliks.

Following this, Adhunik Metaliks — the listed entity — would be reverse- merged with its wholly owned subsidiary OMML.

The company is promoted by the Agarwal family that collectively holds 8.99% of the shares. Sungrowth Share and Stock owns 24.14% and Mahananda Suppliers owns 24.29%.

An email sent to the company seeking comments remained unanswered.

OMML operates the Ghatkuri iron ore mines in Jharkhand and the Patmunda and Orahuri manganese mines in Odisha.

OMML operates an iron ore pellet plant at Kandra, Jharkhand, and a wholly owned subsidiary, Global Commodity and Resources, based in Hong Kong Special Administrative Region, which was set up to boost the company’s trading activity.

SDR rules allow banks to convert debt at a price below the current market value or an average of closing prices during the 10 trading days before the joint lenders’ forum decision. Lenders can own at least 51% of the equity of the company.

Following rules put out by the Reserve Bank of India in June last year, bankers have decided to try out a restructuring for more than a dozen companies including Electrosteel Steels, Jyoti Structures, Lanco Teesta Hydro Power, Monnet Ispat, Coastal Projects and Visa Steel, among others.

However, in a majority of the cases, the loans were not converted into equity and have turned non-performing assets following the RBI mandate to convert debt into equity within 210 days of invoking SDR.

The company runs an integrated steel plant with an annual capacity of 0.45 million tonnes at Sundergarh, Odisha, and was allotted a captive iron ore mine at Keonjhar and captive coal mines at Talcher and Angul in the state.

It is engaged in manufacturing alloy and carbon steel products catering to the auto, power and engineering sectors.

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