Companies

Liberty House to restart operations at Adhunik by September-end

Suresh P Iyengar Mumbai | Updated on September 10, 2020 Published on September 10, 2020

Sanjeev Gupta, Executive Chairman of Liberty House Group   -  Bloomberg

Invests ₹500 crore; power supply from discom restored

Liberty House plans to restart production at its acquired steel companies, Adhunik Metaliks and its subsidiary Zion Steel, in a phased manner by September-end.

Liberty House had acquired these two firms through an insolvency-driven process.

Adhunik has already restored the power supply from the State power distribution company even as it is working to restart its captive power plant by this month-end.

Sanjeev Gupta-led Liberty House has already invested ₹500 crore in Adhunik and will pump in another ₹300 crore in the coming months.

Liberty House has plans to double the capacity of the plant in the medium term.

Adhunik will employ about 1,100 people at its plant.

In an interview to BusinessLine in July, Gupta, a Indian-born British businessman, had said that Covid-19 disrupted the turnaround plan of Adhunik, otherwise it would have been operational by then.

“We plan to start operations by September. We also have plans to upgrade and expand the company,” he had said.

Adhunik has an integrated steel plant in Odisha with 0.5 million tonne capacity and 34 MW captive power plant.

It was one of the leading manufacturers of alloy and speciality steel. It supplies auto-grade alloy steel, stainless and engineering steel.

Given the slowdown in the auto sector, the company plans to restart production in a phased manner and ramp up capacity utilisation to optimal level in one year.

The demand in the auto sector has been increasing in the last three months, particularly from the tractor segment, said a senior executive of Liberty House.

He added that the company’s recent connect with customers has revealed that they look forward to Adhunik’s re-entry in the market. Adhunik had suspended production in 2017 due to heavy cash crunch after it defaulted on ₹5,000 crore loan.

Twists in acquisition

The entire resolution process of Adhunik was filled with many twists and turns. The lenders had received resolution plans from Liberty House and Maharashtra Seamless, a part of the DP Jindal Group.

The Kolkata bench of NCLT approved the resolution plan of Liberty House in July, 2018. However, while approving the plan, the adjudicating authority rejected MSTC Ltd’s claim of ₹108 crore. Subsequently, MSTC filed an appeal in NCLAT which dismissed the plea last March. Following this, MSTC filed an appeal in the Supreme Court which also rejected the appeal. Even while the Supreme Court was hearing the MSTC plea, NCLT directed Liberty House to make upfront payment within 30 days, but the company missed the deadline. Following this, NCLT had ordered liquidation of the asset. However, NCLAT stayed the liquidation order last July and Liberty House paid the entire amount this February to close the deal.

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Published on September 10, 2020
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