NCLT orders liquidation of Kolkata-based company as no suitor or resolution is found
Even as some large but ailing primary steelmakers are being rescued through the non-performing asset resolution process, the smaller companies dotting the fringes of this sector are rushing towards liquidation, making almost all the bank loans to such companies unrecoverable.
Impex Metal and Ferro Alloys, with over Rs 645 crore of unpaid loans, joins the growing list of such companies failing to get any bids acceptable to the bankers and getting liquidated.
"Resolution professional submitted that he would be filing application for liquidation of corporate debtor as no resolution plan is received and he will also be filing application under Section 43 for forensic audit. He may file within three days by giving copy to the corporate debtor," the Kolkata-bench of National Company Tribunal ordered.
Liquidation has been ordered by the NCLT despite Impex Metal getting three resolution bids and a suitor in Sarda Energy and Minerals, a financially healthy the mid-sized entity with a turnover base of Rs 1,575 crore earned in fiscal 2018 and good profitability.
With liquidation ordered, State Bank of India is likely to end up recovering a fraction of Rs 511 crore that it had given to the company while Bank of Baroda would lose a chunk of Rs 100 crore that it had extended.
When the resolution process was in progress, Impex Metal got three proposals, but Sarda Energy responded with an offer only after the period for entertaining applications for resolution proposals was over.
Sarda even approached the NCLT, arguing that its offer should be considered by the Committee of Creditors on the ground that the company was headquartered in Raipur, and got aware of the case being considered by the Kolkata bench of NCLT late.
The judges found the argument not believable, and hence rejected its application.
None of the offers being considered by the CoC were accepted eventually.
The case of Impex Metal encapsulates the state of affairs at the small steel players.
The company belongs to the SK Patni family of Kolkata, which has several listed steel companies under its fold like Rohit Ferro Tech, a ferro chrome producer, Ankit Metal & Power, an integrated steel plant and Impex Ferro Tech, a leading player in manganese alloys.
All these companies are in trouble and banks are trying hard to recover some of their dues, which together are over Rs 1,000 crore.
CASH STRAPPED
- Rs 511 crore – SBI loan to Impex Metal
- Rs 100 crore – extended by Bank of Baroda
- Rs 1,000 crore – owed by several small steel units
STUCK MONEY
- Liquidation was ordered despite Impex Metal getting three resolution bids and a suitor in Sarda Energy
- Sarda approached the NCLT arguing that its offer should be considered as it came to know late about the case
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