Arcil seeks suitors for Jhagadia Copper
Jhagadia’s lead bankers, ICICI Bank and IDBI, say they have transferred loans worth around Rs 600 crore to Arcil.
By TNN |
MUMBAI: Asset reconstruction company Arcil could soon be looking for suitors for ailing copper maker Jhagadia Copper, which was once courted by large companies such as Sterlite and Hindalco.
Jhagadia’s lead bankers, ICICI Bank and IDBI, on Wednesday said they have transferred loans worth around Rs 600 crore to Arcil, paving the way for a possible sale of the copper company.
Currently, the company is being run by a professional management appointed by its lead bankers, after the lenders changed ownership of the company.
According to norms, an asset restructuring company can sell or restructure the loan of an ailing company, provided 75% of the lenders agree. While ICICI has sold only its term loan and retained the working capital loan on its books, IDBI has sold its entire loan exposure to the asset reconstruction company.
“Although Arcil has acquired 73% of the loan value, ICICI is likely to support the asset reconstruction company in its restructuring plan,” said sources.
It is also learnt that Arcil is negotiating with other lenders, SBI and IFCI, to acquire their exposure in Jhagadia so as “to build a strong case to sell the company’s assets to prospective buyers,” sources added.
Jhagadia makes 50,000 tonne of copper through a copper-smelter-cum-refinery in Gujarat by using scrap copper, instead of the traditional way of using copper concentrate. The company ran into trouble after demand from its main user — the jelly-filled telephone cable users — fell sharply with the entry of mobile phones.
Jhagadia Copper reported a net loss of Rs 27.6 crore in the fiscal first quarter, compared to a net loss of Rs 4.9 crore last year. Revenue fell 51% to Rs 41.4 crore.
It is estimated that the consumption of refined copper in India is increasing at 5-6% annually and the domestic market for refined copper is mainly in the form of rods and cathodes.
The rod market, which was affected by a dip in demand from fixed telephones, is being met by growth in power cables and house wiring segment, besides transformer segment which also has shown incremental growth.
Consumption of refined copper is estimated to be 350,000 tonne a year. However, with smelters increasing their production capacities, India has become a net exporter of refined copper.
Jhagadia’s lead bankers, ICICI Bank and IDBI, on Wednesday said they have transferred loans worth around Rs 600 crore to Arcil, paving the way for a possible sale of the copper company.
Currently, the company is being run by a professional management appointed by its lead bankers, after the lenders changed ownership of the company.
According to norms, an asset restructuring company can sell or restructure the loan of an ailing company, provided 75% of the lenders agree. While ICICI has sold only its term loan and retained the working capital loan on its books, IDBI has sold its entire loan exposure to the asset reconstruction company.
“Although Arcil has acquired 73% of the loan value, ICICI is likely to support the asset reconstruction company in its restructuring plan,” said sources.
It is also learnt that Arcil is negotiating with other lenders, SBI and IFCI, to acquire their exposure in Jhagadia so as “to build a strong case to sell the company’s assets to prospective buyers,” sources added.
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Jhagadia makes 50,000 tonne of copper through a copper-smelter-cum-refinery in Gujarat by using scrap copper, instead of the traditional way of using copper concentrate. The company ran into trouble after demand from its main user — the jelly-filled telephone cable users — fell sharply with the entry of mobile phones.
Jhagadia Copper reported a net loss of Rs 27.6 crore in the fiscal first quarter, compared to a net loss of Rs 4.9 crore last year. Revenue fell 51% to Rs 41.4 crore.
It is estimated that the consumption of refined copper in India is increasing at 5-6% annually and the domestic market for refined copper is mainly in the form of rods and cathodes.
The rod market, which was affected by a dip in demand from fixed telephones, is being met by growth in power cables and house wiring segment, besides transformer segment which also has shown incremental growth.
ADVERTISEMENT
Consumption of refined copper is estimated to be 350,000 tonne a year. However, with smelters increasing their production capacities, India has become a net exporter of refined copper.
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