Though a concrete proposal is yet to be framed, a likely cut in interest rates and extension in tenure of repayment (of loans) is on the cards, according to senior bank officials having knowledge of the matter.
A consortium of 21 banks, including UCO Bank, SBI, United Bank of India and Allahabad Bank, has exposure to the company.
“A proposal to take it to the CDR (corporate debt restructuring) cell has been made. Restructuring is yet to begin,” a senior bank official, with knowledge of the developments, said.
According to Mr Aditya Jajodia, Chairman and Managing Director, Jai Balaji, there is some stress in the company. “The restructuring package is under discussion,” he told Business Line after an extraordinary general meeting held here recently.
Jai Balaji's Rs 400-crore coke oven plant in Durgapur in West Bengal is likely to be operational by June. The plant is a part of the company's cost cutting measures. It has a 0.8 million tonne (mt) steel plant at Durgapur.
“The coke oven plant will help in backward integration in our steel plant. It will help reduce costs by about three to four per cent,” Mr Mr Jajodia said.
Kolkata-based Rs 2,200-crore Jai Balaji currently has five manufacturing facilities located in Durgapur and Raniganj in West Bengal, and Durg in Chhattisgarh. It has a total capacity of one mt of steel production.
The company is also hopeful of commencing work on its proposed steel plant at Raghunathpur in the Purulia district of West Bengal soon.
According to information available on the company's Web site, it plans to set up 5-mt steel plant, 3-mt cement plant along with a 1,215-MW power plant at an estimated investment of Rs 16,000 crore.
Jai Balaji does not envisage any upward revision in product prices on account of a subdued demand due to the ensuing monsoons.
The high raw material costs and its inability to pass on the price rise to consumers has impacted the company's margins by about 8-10 percentage points last year.
Margins are, however, likely to improve this fiscal, Mr Jajodia said.
Source: The Hindus Business Line