Sandur Manganese Posts Rs 6.8-Crore Fresh Loss

The Sandur Manganese & Iron Ores Ltd (SMIORE) has failed to get rid of its 'potential sick company' tag following fresh losses which are all set to erode its peak net worth completely.

The company, during its last accounting closing period which ended on December 31, 1998 (after a period of nine months from April 1997) has made a loss of Rs 6.8 crore. Sandur, which was making profits till the end of 1994-95, incurred an aggregate loss of Rs 35 crore in two years and nine months ending Dec 31, '97. The company's peak net worth was Rs 36.5 crore till March 1995.

This takes into account sale of its property at Bangalore for Rs 19 crore, which enabled it to meet its equity requirement for the Hemavathy Left Bank Canal hydel project. Sandur Manganese is now banking on a 'rehabilitation package' being worked out by Industrial Development Bank of India (IDBI) and other financial institutions and banks, along with a proposal for settlement of arrears to Karnataka State Electricity Board (KSEB), which is under the active consideration of the state government.

Sandur became a potentially sick company under Section 23(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 as on March 31, 1997, and continues to be so. This resulted in the erosion of more than 50 per cent of its peak net worth. It brought this to the notice of BIFR. The company attributed the downfall in its performance to adverse price factor existing for manganese ore business in domestic and abroad. On the other hand, inflationary increases in mining and carrying costs went outside the control of the company, Sandur CMD M Y Ghorpade said.

He also blamed the steep power tariff of Rs 4.2 per unit in Karnataka which has made it 'unworkable' for the company to use any Karnataka State Electricity (KSEB) power. "Apart from the absence of a level playing field, there is also the problem of 'dumping' (from abroad) being faced by the ferro-alloy industry," he said.

To safeguard its viability and profitability in the future, Sandur has undertaken to expedite the three hydel projects allotted to it by the Karnataka government. Indian Renewable Energy Development Agency Ltd (Ireda) has sanctioned a loan of Rs 35 crore to its Hemavathy river project which will cost Rs 48 crore and generate about 56 million units of energy per year.

Hemavathy river bed project, which is expected to be commissioned in 2000, will strengthen SMIORE's profitability, he said. The company plans to play a major role in power generation in future, he added.