Essar Steel liquidator gets claims for ₹77,785-cr from debtors, staff

Suresh P Iyengar Mumbai | Updated on January 09, 2018

Insolvency Resolution Professional accepts claims worth ₹49,108 cr and rejects ₹302 cr

The Insolvency Resolution Professional (IRP) appointed for Ruias-owned Essar Steel has received claims for ₹77,785 crore from 49 lenders and ₹20 crore from employees.

Of the overall dues, financial creditors including banks and financial institutions have claimed ₹54,851 crore. IPR has accepted claim worth ₹49,108 crore and rejected ₹302 crore.

It is in the process of verifying claim of ₹3,762 crore for differences in computation of interest and penal charges with each of the financial creditors based on their documents.

SBI, the largest lender to Essar Steel, has claimed ₹13,652 crore. IRP has accepted demand for recovering ₹13,131 crore and rejected ₹21-crore claim.

Edelweiss Asset Reconstruction, which has acquired the company’s stressed asset from various banks, has sought recovery of ₹5,527 crore, of this, ₹5,329 crore has been accepted.

Interestingly, Essar Steel Jharkhand, a Group company which has invested in Essar Steel through inter-corporate deposit, has claimed recovery of ₹2,827 crore, while Essar Steel Marketing has sought ₹43 crore.

Certain financial creditors have also submitted claim forms for recovering dues of ₹1,671 crore of Orissa Slurry Pipeline Infrastructure.

Until the interim injunction granted by the Kolkata High Court is vacated and a final judgment is rendered confirming the terms of the deed of cancellation executed between ESIL and OSPIL, the reversal of the business transfer is not effective, and therefore, OSPIL’s lenders do not have direct recourse against ESIL, IRP said.

In August, the National Company Law Tribunal appointed Satish Kumar Gupta as the interim resolution professional for Essar Steel.

It was among the 12 companies chosen by RBI for cumulative debt recovery of ₹2.4 lakh crore under the bankruptcy court.

Last month, Gupta had sought resolution plans from potential investors by October 23.

Output dips

Production at Essar Steel has reduced by 15 per cent since the company was referred to NCLT. Between December 2016 and May 2017, the company’s monthly production averaged at 5.4 lakh tonnes.

The average monthly production between June and October has dipped to 4.75 lakh tonnes at a time when other steel-makers have increased their production.

For instance, Tata Steel and JSW Steel output increased three per cent and one per cent to 3.03 mt and 3.94 mt in September quarter.

Amidst weak demand and rising cost, Essar Steel EBITDA has fallen to ₹475 crore in the September quarter from ₹750 crore, sources said.

This is bad news for the lenders since the decline in production will erode the value of the company and of the bids that it attracts.

Essar Steel was paying ₹250 crore a month to lenders towards loan servicing which has come to a halt after IRP took over the reins.

Incidentally, lenders have turned down the IRP’s request for additional debt of ₹1,000 crore to manage daily operations, sources added.

Meanwhile, Sajjan Jindal, Chairman and Managing Director, JSW Steel in a tweet said exemptions for scheme framed under erstwhile SICA (Sick Industrial Companies Act) and approved by BIFR (Board for Industrial & Financial Reconstruction) should be extended to insolvency proceedings.

“Bid eligibility and evaluation criteria must be disclosed upfront and applied uniformly in all the (recovery) cases. We cannot have different criteria for different companies,” he added.

Published on November 10, 2017

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