Mukand Moves Fis, Banks To Recast Debt

The Bajaj-Shah group steel flagship Mukand, which slipped into the red last year, has approached institutions and banks for an extensive debt restructuring to lower its interest charges.

The company has put forth a proposal for reducing interest rates and rescheduling the repayment obligations to match with its expected internal accruals.

Managing director Neeraj Bajaj, who confirmed the development, said: "We are talking to institutions and banks on a debt restructuring. and hope the process will be through by end-October."

Bajaj, however, declined to reveal further on the precise proposals citing the sensitiveness of the issue.

The Rs 800 crore company has an outstanding debt of Rs 1,002 crore, of which Rs 925 crore is secured debt. Mukand, during the last fiscal, paid interest charges of Rs 167.8 crore, more than 20 per cent of its operating turnover.

Mukand had posted losses last fiscal at Rs 40.8 crore against a profit of Rs 58.5 crore in the previous year.

Its loan portfolio comprises debentures of Rs 241.6 crore, while long-terms loans from institutions is nearly Rs 210 crore and from banks is around Rs 39.5 crore. The working capital loan from banks stands at Rs 415 crore, while outstanding interest accrued is over Rs 18 crore.

Mukand manufactures alloy steel, stainless steel and special steel. Its operations have suffered from the general recession which resulted in fewer orders and substantial pressure on selling prices.

The company's exports last year was up by 29 per cent at Rs 87 crore against Rs 67 crore in the previous year. Its exports mainly comprised stainless steel wire rods and bright bars but it however has not been unable to find viable markets for alloy-steel products.