With no buyer for Jyoti Structures, banks to sell assets

MUMBAI: Banks that had acquired debt-laden Jyoti Structures under debt restructuring rules, are now getting ready to sell off its assets piecemeal, two people familiar with the matter said. After several attempts to sell controlling stake in the heavy electrical equipment maker failed, the lenders have called expression of interest (EoI) from interested parties, the persons cited earlier said.

Jyoti Structures has defaulted on loans of more than Rs 2,000 crore. In August last year, the consortium of banks, led by State Bank of India, had taken operational control of the Mumbai-based company by invoking strategic debt restructuring norms after it firm failed to clear its dues. They however, failed to attract buyers for equity in the company.

“Direct independent discussions are not working out in this case, so we have sought expression of interest by interested parties,” a senior executive of one of the lending banks said on the condition of anonymity.

In an email response to ET’s query, a spokesperson for Jyoti Structures said, “Joint Lender Forum invited expression of interest in terms of extant RBI guidelines. We understand that they have received expression of interest. ”

An EoI is not a binding agreement, hence lenders do not necessarily have to auction the controlling stake to those who have shown interest. Banks can also approach a suitable buyer and request a bid.

Companies where lenders have sought EoI include Electrosteel Steels, Adhunik Power and Natural Resources Ltd and Gammon India.

Lenders are hopeful of selling the company as it has a healthy order book. “The company has an order book of Rs 4,610 crore. Internal estimates show that these would start generating revenues of Rs 1,300 crore per year in the next three to four years,” another banker said.

The company also operates manufacturing plants in Nashik, Raipur and Dubai, with a combined capacity of 215,000MT of transmission line towers. It also has an in-house tower testing facility at Igatpuri.

“We are hopeful that domestic and foreign buyers will be interested in buying these assets,” the people cited earlier said.

“In SDR, there is always a possibility of a promoter bringing his own investor that is being eliminated with EoIs,” they said.