Ramsarup goes for CDR to restructure Rs1,800 cr debt

Ramsarup Industries, wire and TMT bar manufacturer, is going for corporate debt restructuring (CDR) to attract private equity (PE) investment.

The company currently has Rs1,800 crore debt in its books out of which 95% has been put under the CDR mechanism.

The Kolkata-based company plans to become a completely integrated player in the steel sector in the next one year and is currently building a steel plant at Kharagpur in West Bengal.

“We will invest around Rs1,700 crore in the Kharagpur project and for this we will be requiring PE participation,” said Ashish Jhunjunwala, chairman and managing director, Ramsarup Industries.

He said though the company has a sound net worth, its cash on books is minimal and most of the cash flows go into debt repayment.

“Unless we have good cash flows and lesser debt burden, it will be difficult to attract PE investment in the company,” he said, adding it was the reason for the company to contemplate debt recast.

He, however, did not divulge the amount it would raise through the PE route.

“We expect the debt restructuring to be completed by the end of the current financial year,” he said, adding, post this Ramsarup will require another seven months to complete its steel smelting plant in Kharagpur.

It will also be setting up a sinter plant in the next 12-14 months at Kharagpur after the restructuring exercise.

“The sinter plant will also add to the cash flows as we will be using iron ore fines to produce steel which is more cost-efficient,” he said.

“Our blast furnace and power plant are already ready at Kharagpur but that is not generating cash so far, so we want to complete the entire project as early as possible to bring in additional revenues,” he said.

The total debt is unevenly distributed among a number of banks including Punjab National Bank, IDBI Bank, ICICI Bank and Axis Bank and several other smaller banks.

PNB is the biggest lender to the company and the lead banker for the restructuring exercise, said Jhunjunwala. PNB officials could not be reached for a comment.