The Telegraph reported that financial institutions have agreed to consider the case of debt laden Ramsarup Industries under a corporate debt restructuring mechanism, giving the steel maker an opportunity to stay afloat.

The company has INR 1,800 crore loans on its balance sheet putting a strain on its financials and constraining the promoter’s ability to upgrade from a pure commodity player to a value added steel product manufacturer.

Mr Ashish Jhunjhunwala CMD of Ramsarup said that the company was seeking an interest waiver from the financial institutions for the next 18 to 24 months.

He said that “We are not asking for any haircut (reduction of principal amount) or lowering down the interest rate. All the company needs is time to stabilize the business before starting to pay both interest and principal to lenders.”

The CDR proposal will include the addition of INR 700 crore by way of fresh debt and equity to finance expansion and upgradation, and to meet working capital needs.

Ramsarup will submit a detailed plan before the CDR panel within six to eight weeks seeking the approval of the lenders. Cash infusion and debt restructuring are likely to be completed by the end of this fiscal.

The company had taken a resolution for a rights issue to raise capital. Jhunjhunwala said equity would be raised through rights and from private equity investors.

He said he was seeking a loan of INR 350 crore and a similar amount via equity to set up new facilities.

Ramsarup is building a sinter plant to replace expensive ore lumps with iron ore fines in steelmaking, leading to a lower use of coking coal and saving of cost. Ramsarup will put up a steel melting shop to produce special grade billets (a semi finished steel), alloy steel and high carbon steel. The company also plans to improve and increase the production of wires at its Kalyani and Durgapur facilities.

(Sourced from www.telegraphindia.com)