Financial Daily from THE HINDU group of publications
Saturday, Apr 10, 2004
Sandur Manganese set to clear dues
Bangalore , April 9
AFTER nearly four years of being a BIFR case, Sandur Manganese & Iron Ores Ltd (SMIORE) is seeing light at the end of the tunnel.
The once thriving iron and manganese producer has cleared more than 70 per cent of the debts and settlement dues by selling its assets and hopes to shake off the rest this year with a major sale.
It has all but sold to Jindal Iron & Steel Co its lone, profitable ferro alloys plant for a consideration of around Rs 50 crore.
"We recently sold our hydel power plant and some real estate to clear the dues. Once the sale of the ferro alloy plant, too, is through, SMIORE should be debt-free in the next 3-6 months," said Mr Nazim Sheikh, Executive Director of the company. Under the settlement package, SMIORE has so far cleared Rs 114 crore out of the total outstandings of Rs 159 crore.
The proposed sale of the ferro alloy plant would leave SMIORE with only its iron ore and manganese ore mining function.
This lucrative mainstay of its business accounts for Rs 40 crore or a third of its revenue. The company holds the lease to mine manganese and iron ore in Sandur near Bellary and has about 1,500 employees engaged in the activity.
Mr Sheikh said the current boom in steel prices had brought for the ferro alloy plant offers from several top players including Tata Iron & Steel Co, Mormugao Steel and Chattisgarh Electric Company.
The Jindal plant is barely 40 km from SMIORE's in Bellary-Hospet region.
The Sandur company is also negotiating to keep operations and maintenance of the plant.
More recently, it sold its wholly-owned subsidiary, Sandur Fluid Controls Ltd (SFCL), to a small group of SFCL employees.
The new team plans to revive the Rs 43-lakh SFCL on job works in water treatment.
Started in 1954 by the then Sandur ruler, Mr Y.R. Ghorpade, SMIORE was the first and among the largest electrometallurgy units and the second largest manganese ore company in the private sector after the public sector MOIL, Nagpur. SAIL was once its largest customer.
In 1998, the company started tottering due to what Mr Sheikh said was "an unviable power tariff" under dues of Rs 92 crore to Karnataka Power Transmission Corporation, most of it as interest. Declared sick in May 2000, it once had a liability of over Rs 350 crore.
Mr Sheikh said the company made its one-time payment to KPTCL under a special scheme while some 600 employees have been given settlement package under VRS.
After the sale of the hydel plant and land, creditor banks and FIs have been repaid Rs 45 crore of the Rs 92 crore outstanding.
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