MONNET ISPAT & ENERGY
In 2010, Sandeep Jajodia, Founder and Chairman of Monnet Ispat and Energy, was keen to expand the company’s primary steel capacity by 1.5 million tonne to triple its revenue to `5,500 crore and quadruple profits to `1,000 crore in two years. Seven years later, the revenue dipped to `1,412 crore, registering a loss of `2,132 crore with a debt load of `10,000 crore, which could be pushing it to bankruptcy.
Monnet had evolved from a sponge iron manufacturer to a diversified steel, power and mining company since its inception in 1994. But its fortunes turned when the Supreme Court deallocated its coal blocks in 2014. Recently, the NCLT’s Mumbai bench has admitted Monnet’s case for initiating insolvency proceedings. The lending banks, led by the State Bank of India, had converted a part of its loan into equity. Its debtors are now sitting pretty with 51 per cent equity stake while the promoters’ hold only 25 per cent.
The company’s equity capital has expanded from `65 crore to `200 crore, and it is still attractive for a buyout. The bankers, however, admit they will have to take a haircut as the current revenues cannot service the debt. Steel tycoon Sajjan Jindal (also Jajodia’s brotherin-law) and private equity major Blackstone (which holds 2.27 per cent stake in Monnet) have already shown their interest, but have not started any discussion with the banks, according to sources. Jajodia did not respond to Business Today for this story.