Lenders to the loss-making Rohit Ferro-Tech are looking to bring in a new investor into the Kolkata-based company who can take over the management. SBI Capital Markets (SBI Caps), which has been mandated by banks to scout for a buyer, is understood to have received one proposal so far. The promoters — the Patni family and a clutch of firms — could be willing to offload as much as 51% of the 72% they currently hold, bankers familiar with the development told FE.
State Bank of India (SBI) is the leader of the consortium. The company’s total debt (fund and non-fund) stood at rS 2,652 crore and the steelmaker reported a net loss of Rs 336 crore on the back of rS 660 crore in revenues in FY17. “SBICAP invites interested investors/consortium of investors having adequate financial and technical capabilities acceptable to the lenders to take over the management of the company… Preference would be given to investors having captive sources of major raw materials required,” an advertisement seeking investors said.
In December 2015, lenders had decided to convert a large portion of the firm’s loans into equity via the strategic debt restructuring (SDR) route. However, according to data on the BSE website, promoters own 72% of the equity capital. Earlier, in March 2014, Rohit Ferro-Tech’s debt was recast by the corporate debt restructuring cell but the recast failed.
Rohit Ferro-Tech is in the ferro alloy and stainless steel manufacturing sector. The Patni family holds a 5.53% stake, Poddar Mech Tech Services 11.41%, Vasupujya Enterprises 9.98%, Suanvi Trading & Investment Company 9.88%, Invesco Finance 9.7%, Shreyansh Leafin 9.66% and Whitestone Suppliers 9.59%, among others. The company commenced operations in 2003 with a capacity of 24,000 tonnes per annum from its 2 x 9 MVA furnaces in Bishnupur, West Bengal, according to its website. The company has two plants in West Bengal and another in Odisha.
The company is among several other loss-making entities unable to repay bank loans over the last couple of years, thereby adding to the pool of bad loans. The extent of the non-performing asset problem can be gauged from the fact that around Rs 10 lakh crore of loans are either non-performing or stressed; this is roughly 12% of total loans. According to Capitaline data, the total bad loans of 37 banks stood at Rs 7.1 lakh crore in FY17, up 25% from last year. An SDR allows conversion of debt at a price below the current market value or the average of closing prices during the 10 trading days before the joint lenders’ forum decision. They can now own at least 51% of the equity of the company and have up to 210 days to convert debt into equity.