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| Edited By: Sumit Moitra |Source: DNA |Updated: Mar 18, 2018, 04:13 AM IST
Gujarat NRE Coke Ltd, the largest independent producer of metallurgical coke in India is likely to join the race to acquire sick steel maker Shah Alloys Ltd, managing director Arun Jagatramka said.
Gujarat NRE owns 4.9% in the loss-making stainless steel maker, whose recast is pending before the Industrial and Financial Reconstruction (BIFR) and whose debt is under a restructuring scheme.
Gujarat NRE would be joining the fray with JSL Stainless Ltd, which is said to be in talks with the lenders of Shah Alloys for a possible buyout . But the promoters of Shah Alloys denied any talks with the Jindals.
Jagatramka said he will also look at an exit option — he holds 4.90% stake in Shah Alloys — if there is significant price appreciation after implementation of the CDR package and eventual takeover by any other business house.
Gujarat NRE also holds 3.22% stake in Shah Alloys’ group company, SAL Steel, a marginally profit-making company.
“It could be a buy or it could be a bye,” Jagatramka said.
Shah Alloys applied to the BIFR for being declared a sick unit under the Sick Industrial Companies Act (SICA), 1956 after the company’s aggregate losses in the past three years crossed Rs280 crore.
The company’s debt burden was also at a high Rs716.55 crore on a small equity base of Rs19.75 crore.
Jagatramka expects things to turn positive for Shah Alloys.
“We invested in Shah Alloys and SAL Steel as they are in a related industry and we were contemplating some actions there. Sure, the investment is at a loss but we are holding on because they have some good assets,” Jagatramka told shareholders.
Meanwhile, Gujarat NRE has decided not to issue foreign currency convertible bonds (FCCBs) due to poor market sentiment.
“Looking at current equity prices, we have decided not to dilute through FCCBs,” he said.
In June, the company had said it plans to launch a $50 million FCCB due 2016.
“Instead of that we have continued raising loans for which some promoter equity has been pledged,” Jagatramka said.
