SBI not in favour of JSW buying stake in Monnet Ispat

MUMBAI: India’s largest lender State Bank of India is not in favour of a JSW Steel proposal in its current form to buy a controlling stake in debt-laden steelmaker Monnet Ispat, the bank informed the Mumbai bench of the National Company Law Tribunal (NCLT) on Thursday.
The counsel for Monnet Ispat told the tribunal that the company had a buyer for its assets and needed more time to finalise the proposal and that proceedings in the tribunal may jeopardise its stake sale plan. The presiding judge, BSV Prakash Kumar, asked the bank for clarification regarding the total dues of the steelmaker, following which the NCLT will again hear the case on July 17.

Monnet Ispat owes banks over Rs 12,000 crore. It is among the 12 companies the Reserve Bank of India has shortlisted for insolvency proceedings.

The company has not been able to repay loans as its earnings have dipped due to unfavourable supply and demand in the steel industry. It has been incurring losses for 12 consecutive quarters. For the quarter ended June 30, it reported a loss of Rs 399.79 crore and its outstanding liabilities stood at a little over Rs 10,500 crore.

The lenders formed a joint lenders forum (JLF) in 2014 and invoked provisions of strategic debt restructuring (SDR) against the company in 2015. SBI and its associates have made a claim of Rs 2,240 crore, of which Rs 1,539 crore is overdue.

The timeline fixed to find a buyer for the company was February 2017.