Wire and TMT bar manufacturer Ramsarup Industries is going for corporate debt restructuring to attract private equity investment. The company currently has INR 1,800 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.

Mr Ashish Jhunjunwala chairman and managing director of Ramsarup Industries said that “We will invest around INR 1,700 crore in the Kharagpur project and for this we will be requiring PE participation.”

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.

Mr Jhunjunwala said that “Unless we have good cash flows and lesser debt burden, it will be difficult to attract PE investment in the company adding that 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.

He said that “We expect the debt restructuring to be completed by the end of the current financial year 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 to 14 months at Kharagpur after the restructuring exercise.”

Mr Jhunjunwala said that “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. 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.”

(Sourced from DNA)