Financial Daily from THE HINDU group of publications
Friday, Jun 03, 2005
Financial Daily from THE HINDU group of publications Friday, Jun 03, 2005 |
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Corporate
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Restructuring Bhuwalka sells Lankan plant, to halve its debt Our Bureau
Bangalore , June 2 SECONDARY steel maker Bhuwalka Steel has sold its steel plant in Sri Lanka and plans to more than halve its debt by next year. The Bhuwalka Steel Vice-President for Finance, Mr P.K. Chamaria, told Business Line that it has sold off its plant to a local company in Sri Lanka, Confab Steel, for around Rs 12.25 crore. Mr Chamaria said the company plans to use part of the sale proceeds to pay off its debtors. The rest of the proceeds and money from sale of smaller units around Karnataka will be used to reduce the debt to Rs 18 crore from Rs 38 crore. Mr Chamaria said the company is also negotiating with financial institutions to retire high-cost debts. The decision to exit from Sri Lankan operations was because of high fluctuations of the Sri Lankan currency and the fluctuating conditions prevailing in that country. Bhuwalka Steel was the first Indian steel company to set up a plant for manufacturing long steel outside the country. It had originally invested around Rs 12 crore in the 50,000-tonne plant in Sri Lanka, which was partly funded by the Exim Bank of India. But over the last few years, the Sri Lankan currency had depreciated, thereby, eroding the value of its investments. Mr Chamaria said the entire operations of the company are being restructured with some of the smaller units being put up for sale. This was being carried out to consolidate the operations of the company, reduce term liabilities and improve debt servicing. The total capacity of the Bhuwalka units is around 2.71 lakh tonnes. For 2004-05, the company posted a turnover of over Rs 450 crore. Meanwhile, Bhuwalka Steel has launched reinforcement steel bars (rebars), under brand name `Bhuwalka Thermex'. The production of these bars will be through a licensing arrangement with the German-based Henningsdorfer Staahi Engineering Gmbh. The Thermex technology helps manufacture of economical bars and are ideal for seismic zones.
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