The Hindu Business Line : ICICI Bank, IDBI close to selling SWIL stake

ICICI Bank, IDBI along with other institutions, which took over the management of the copper smelting project of SWIL Ltd more than two years ago, are moving closer to selling their over 50 per cent stake in the company to a prospective investor. "Initial discussions are on with a few strategic buyers. There are both domestic and overseas parties who seem interested in the stake. It should fetch a good price now since it is no longer a distressed asset. It is now a fully functional unit," said institutional sources.

The scouting for investors had been on in the previous year itself when the Bharuch plant was not functional. But the prospects for a sale at a higher valuation are better now since with the plant is functional. Interested parties in the 50 per cent stake included Indo Gulf Ltd of the A.V. Birla Group, Sterlite Industries, Finolex Industries Ltd of Mr P.P. Chabbria and the UK-based Metdist owned by Lord Bagri, President of the London Metal Exchange.

The company started its trial operation in March at the smelter in Bharuch (Gujarat) and produced 200 tonnes last month. It is expected to produce 500 tonnes of copper cathode in April and 1,000 tonnes in May.

Through the restructuring process, the management of the company had been taken over by institutional investors with Mr P.P. Vora, former Chairman of IDBI appointed as the non-Executive Chairman of SWIL. Mr Vora said, "Efforts are on to turn SWIL into a profit-making company. Whether the stake sale happens or not depends on the banks and FIs."

SWIL, with 70,000 tpa capacity to produce refined copper has been through the corporate debt restructuring mechanism, and has received fresh funds in order to commence operations. "Funding will be given on a pro-rata basis," said the source.

The company would be the third-largest producer of copper on reaching full capacity. The major two copper producers are Birla Copper and Sterlite Copper.

SWIL has been a project under implementation and technically not a `bad asset' for over two years now. It owes large amounts to ICICI Bank and IDBI. Amount due to ICICI Bank alone is over Rs 550 crore. Smaller amounts are also due to Industrial Investment Bank of India, Industrial Finance Corporation of India (IFCI), State Bank of India, Life Insurance Corporation (LIC) and General Insurance Corporation (GIC).

The company, which was earlier part of a group of three units in Bharuch, Nashik and Uttarpada in Bengal, was de-merged with the lenders taking over the Bharuch unit. The other two units remain with the former promoters, Mr Anil Khaitan and Mr Satyanarayan Khaitan.

The shareholding pattern of the company as on March 31, 2004, is as follows: Indian promoters and persons acting in concert 32.6 per cent; ICICI 14.09 per cent; IDBI 13.22 per cent; IFCI 7.07 per cent; LIC 6.62 per cent; Gujarat Industrial Investment Corporation 5.92 per cent; Gujarat State Finance Corporation 1.93 per cent; Mutual funds and UTI 5.13 per cent; Administrator of Specified Undertaking 4.56 per cent and public 5.98 per cent.

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