Gujarat NRE Coke files for bankruptcy

Gujarat NRE Coke has filed for insolvency with the National Company Law Tribunal. The company is a producer of coke, which is used by industries such as the steel sector. 

The company, listed on both BSE and National Stock Exchange, owes Rs 3,200 crore to a group of lenders that include the State Bank of India. 

An insolvency professional said, "A group of 16 banks lent to the company." 

This comes at a time when the company, which is in red, is planning to achieve positive core profit by restoring its operational efficiency. It also plans to reach capacity use of 60 per cent by the end of this year.

The company has filed under section 10 of the Insolvency and Bankruptcy Code, where the corporate debtor files for insolvency in an attempt to restructure its business.  

This is not the first case where a debtor has filed for insolvency. Vijay Mallya-led UB Engineering had filed for insolvency under this section as the company was unable to restructure its business. UB Engineering had liabilities worth Rs 450 crore.  According to the Insolvency and Bankruptcy Code, insolvency can be filed by creditor or debtor. 

Gujarat NRE Coke, the flagship company of Gujarat NRE group, is one of the largest producers of met coke in India with an installed capacity of 1.5 million tonnes per year.

The company had tried to restructure its business in October 2013 after an auditor's comment on its Australian subsidiary cast doubts over the ability to pay off its debt. The restructuring also included a fresh-term loan of Rs 50 crore.

The company had also tried to sell its windmill assets in 2016, without success. 

The total income of the company during the quarter ended December 2016 was Rs 182 crore as compared to Rs 143 crore in the same quarter a year ago. During the December quarter this financial year, the net loss of the company was Rs 126 crore as compared to Rs 301 crore a year ago. 

The share of the company was down 5.6 per cent to Rs 2.6 on BSE.