Kolkata-based Electrosteel group’s woes end in the next couple of months.

While bankers are expected to sanction a Rs 7,000-crore debt recast plan for the troubled Electrosteel Steels Ltd (ESL) this month, the group also hopes to get the final go-ahead to develop its iron ore block in Jharkhand in the next four-five months.

“The CDR (corporate debt restructuring) package is ready. It will be considered for approval this month,” a banker told Business Line.

A major player in the ductile iron pipe market (used in water supply and sewerage) through Electrosteel Castings, the group landed in trouble due to the delay in commissioning the 2.5-million-tonne integrated steel plant at Bokaro in Jharkhand.

Spearheaded by ESL, the Rs 10,000-crore project has been delayed by more than an year, leading to a major cost over run.

Efforts were made in Januaryto raise nearly $250 million (Rs 1,700 crore ), either as loan or equity investment, but with no success.

Finally in May this year, ESL approached the lenders for a restructuring of the Rs 6,950 crore debt burden for a relaxed repayment schedule.

Following discussion among the 27 lenders, a final package was prepared in August by the lead bank, the State Bank of India. The package now awaits a formal approval from bankers.

Progress in mining

According to sources, the debt recast for ESL will also help the group speed up its captive mining projects that will feed the steel plant.

Electrosteel was awarded captive iron ore, prime coking coal and steam coal assets in Jharkhand. Though the company maintains that it started coking coal production from the Parbatpur block, according to vendors, mine development has been hit due to cash crunch.

Kodilabad asset

Meanwhile, the company has made progress in getting environment and forest approvals to develop its iron ore asset at Kodilabad.

The iron ore project got held up due to the delay in getting clearances in the aftermath of the illegal mining controversy a few years back. When contacted, a senior Electrosteel official said the company is expected to transfer alternate land to the forest department for plantation to get the final approval.

“We are extremely hopeful to start iron ore production early next fiscal,” the official said.

pratim.bose@thehindu.co.in

Related Topics