Tata Capital moves HC against SKS Ispat’s demerger plan to recover dues of about Rs 50 crore

MUMBAI: Challenging a demerger plan of Mumbai-based SKS Ispat & Power in the Bombay High Court, Tata Capital, a financial arm of Tata Group has filed a notice against the steel maker in a bid to recover dues of about Rs 50 crore.

SKS Ispat & Power had initiated a proposal to transfer the company’s properties along with rights, power, liabilities and assets of the Cement business to SKS Cements, said two people familiar with the development.

SKS Ispat & Power had filed a Company Scheme Petition in the Bombay High Court for approval of the scheme.

The scheme has, however, got one of its lenders in a tizzy, as SKS Ispat & Power has defaulted on a term loan of.`50 crore. This has forced Tata Capital (TCFS) to recall the entire loan amount and has filed an objection to the merger scheme in the court.

"Our client has objected the proposed demerger of the Cement Division of SKS Ispat and Power," said Ashok Paranjpe, Managing Partner of Mumbai based law firm MDP & Partners who is representing Tata Capital. However, he refused to divulge more details. An email and phone call to SKS Ispat & Power did not elicit any response.

According to another person privy to the matter, “SKS Ispat & Power is attempting to hive off its profit making undertaking to its subsidiary at a meagre value.” The company’s balance sheet shows total liability at over Rs 1,638 crore till March 2012.

The Tata petition claims that, there is no reference in the merger document as how much money SKS Ispat and Power would receive from this transfer of the cement division to SKS Cement.