Mesco plans to acquire steel plants
Mesco Steel plans to acquire some plants to tap into the growing opportunities in the domestic market and more than double its production capacity to 5.25 million tonnes, said the company's CMD Rita Singh said. She however declined to comment on whether Mesco was targetting a company facing insolvency proceedings.
But according to sources, Mesco is interested in Electrosteel, which has a debt of Rs 10,000 crore and, is also exploring a few options in three Indian states. These plants either have huge debts or are unable to face tough competition in the market, they said, reports PTI. "We have a total production capacity of 2.25 MT from our 2 plants Mideast Integrated Steels and Maithan Ispat Limited at Jajpur, Odisha. We want to expand our capacity to 5.25 MT looking at the opportunities in the sector. Mesco is always interested in acquiring such debt-laden assets," Singh told PTI in an interview.
Automobile and infrastructure sectors are growing by leaps and bounds and both require lots of steel, she said. On the risks involved in turning around firms which are under-performing or debt-laden, she said: "We are an experienced player and we are a master in it. We made the Maithan Ispat functional within 10 days of acquisition." Odisha-based Maithan Ispat was acquired by acquired Mesco in a debt and equity deal in March, 2015.
"On April 10, we made the plant functional. Turning around an under performing or debt-laden plant is an art and we know it well," Singh said. She added that Mesco will acquire a debt-laden firm if it comes its way. Singh said that referring firms to the NCLT for insolvency only delays the recovery process and likened the process to "out of court settlement". If some company is unable to perform, the creditors can suggest them some potential buyers to whom the debtors can go directly, she said, adding that it makes the entire recovery process much smoother. She said the same happened when the company took over Maithan Ispat.
"If today Maithan Ispat was on the RBI list, do you think the creditors would have got their entire due amount so smoothly and quickly." Maithan had a debt of Rs 614 crore and now it has been regular in payment of interest and principal to the tune of Rs 188 crore, she said, adding that it has been successfully turnaround by Mesco within 2 years of acquisition. "We are likely to expand the existing facility of Maithan Ispat limited by adding TMT and Heavy Section Mill," she said.
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