Even as Electrotherm (India) Ltd is getting ready to transfer its ductile iron (DI) pipes business and 100 per cent stake in a subsidiary for Rs 950 crore to Saint Gobain of France, it is confronted with a winding-up petition.

Though it may come as a relief for the company that no order has yet been issued by the court in this regard, there is no comfort to the shareholders as the stock hit its 52-week low on Friday on the NSE. In fact, the stock has shed a near 75 per cent value in the past one year.

Electrotherm (India) Ltd has said that the Gujarat High Court has admitted a petition filed by UCO Bank to wind up EIL. While the petition has been admitted by the High Court, no winding-up order has been made against the company. The company has filed an appeal seeking stay on the order of admission.

It was on December 14 last year, Electrotherm executed binding agreements following which Saint-Gobain Produits Pour La Construction SAS, France, would acquire the ductile iron pipes business and 100 per cent stake in a subsidiary for Rs 950 crore, in addition to the value of working capital at closing.

Mr Avinash Bhandari, Joint MD, Electrotherm (India), said then that the transaction would enable the company to focus on its core businesses of engineering and steel and to reduce debt.

It is not clear what was the reason for UCO Bank to approach the court for winding up the company at this juncture, when the company has signed a major deal that would help clean up the balance-sheet.

Electrotherm’s board of directors on January 30, 2012, had approved the proposal to make a reference to the Corporate Debt Restructuring cell. Subsequently, the board approved the extension of financial year 2011-2012 by three months, i.e. up to June 30, 2012.

In the Q3 of FY 2011-12, the company recorded a standalone turnover of Rs 318.9 crore compared with Rs 404.9 crore in the same period last year. But the loss during the third quarter this year, though marginally less than in the same period in the previous year, was substantial at Rs 131.4 crore (Rs 152.9 crore).

For the first nine months of FY 2011-12, the company’s standalone turnover dropped sharply to Rs 11,96.1 crore from Rs 17,09.1 crore in the same period in 2010-11 fiscal.

The company sustained a colossal loss of Rs 421.2 crore during the nine months of the current fiscal against a net profit of Rs 24.8 crore in the first nine months of the previous financial year. This was because of the substantial interest outgo of Rs 231 crore the company incurred during this period.

In the first nine months of FY 2011-12, the special steel division, of which the ductile iron pipes division is a part, contributed Rs 962.7 crore to the turnover.

It was not specifically mentioned in the results as to what was the share of DI pipes division, which the company has agreed to sell to Saint-Gobain, to the turnover of the company.

Of the three divisions of the company — engineering and projects division, special steel division and electric vehicle division — the highest turnover is from the special steel division.

But the shares of EIL sank to their 52-week low of Rs 62 on the NSE on March 30, 2012. The share had hit its 52-week high of Rs 232.50 (face value Rs 10) on April 6, 2011. The trading volume was about 9,070 shares.

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