JYOTI STRUCTURES
J yoti Structures has been grappling with multiple problems. Delayed payments after execution of orders hurt this maker of power transmission towers. The Mumbai-based company’s aggression in the overseas market too did not pay off. Then Jyoti, a leading Engineering, Procurement, Construction player in the power sector, made profits until 2014 but was subsequently hit by rising interest costs – they have shot up five times in the last five years after loan defaults. The promoters, Thankur, Valecha and Mirchandani family, have just 18 per cent stake. The bankers did invoke Strategic Debt Restructuring (SDR) Scheme in 2015 to take management control, but they failed to convert their part of debt into equity in 210 days, as stipulated in the guidelines. Later, the bankers tried hard to sell the company outside SDR but that also didn’t fructify. The bidders included Shriram, Essel, KEC, Kalpataru and Dubai-based Amin Group.
Jyoti was the first company, among the 12, referred for bankruptcy proceedings. The Mumbai bench of NCLT has initiated the process and appointed consultant BDO LLP as the insolvency professional based on the recommendations by the lead lender SBI. “We will now revive the stake sale plans under bankruptcy code,” says a banker. The company is a good candidate for bringing a strategic investor or a complete change of management. The promoters don't have enough equity to fight back. If need be, the bankers are willing to convert a part of the debt into equity to take control of Jyoti for subsequent sale of business under the bankruptcy code. An email sent to the company management went unanswered.
The net worth of the company has been completely eroded. The bankers claim that a new buyer would be found soon for Jyoti Structures but the consultants say it won’t be easy.