Ailing Jai Balaji Industries, which has an integrated steel plant with five manufacturing facilities located in Durgapur and Raniganj in West Bengal and Durg in Chhattisgarh, appears to be in trouble. Its board has taken a view that since the accumulated losses of the firm for the year ended March 2015 has surpassed the net worth, a reference be made to the Board for Industrial and Financial Reconstruction (BIFR).
The company has been consistently reporting losses. In June quarter, the company logged a net loss of Rs 97 crore on the back of 28 per cent drop in sales at Rs 239.43 crore. In the March quarter, losses were Rs 162 crore. For the year ended March 2015, Jai Balaji Industries posted about Rs 386 crore loss. This was against Rs 333 crore loss in FY14 and Rs 223 crore loss in FY13. The company's share price has declined 67 per cent from 52-week high of Rs 28 in August 2014 to Rs 9.10 apiece on the BSE at present. As on June 30, the company's promoters held nearly 59 per cent stake but over two-thirds of the same holding was encumbered.
A sick company, according to Sick Industrial Companies (Special Provisions) Act, 1985, is one where at the end of a financial year, accumulated losses are equal to or more than its net worth. This is one of the parameters that the BIFR, part of the Department of Financial Services of the Ministry of Finance, looks at to judge whether a firm is sick or not. Once a company has made a reference to the BIFR and it is being considered, or if a scheme for it is under consideration or has been sanctioned, no suit for recovery of money can be started without the approval of BIFR or the appellate authority.
"Formed an opinion that the accumulated losses of the company for the year ended March 31, 2015 having exceeded the entire net worth, a reference be made to the Hon’ble Board for Industrial and Financial Reconstruction in terms of the provisions of Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985," the company informed after its board meeting on August 14.
It has been also proposed to convert the loan received from Hari Management Limited, promoter shareholder of the company, into zero interest unsecured unlisted non-convertible debentures, subject to statutory approvals.
Jai Balaji Industries was among the firms hit by the Supreme Court of India judgement cancelling numerous coal blocks. The company is mainly engaged in production of iron, steel and allied products and providing services in India. At the end of March 2014, the company had long-term and short-term borrowings amounting to over Rs 2,300 crore.
Prices of Chinese flat steel products, usually 10-15 per cent lower than Indian steel prices, have led to huge jump in imports from that country. Russian steel shipments have also eaten into the market share of established Indian companies. This has put stress on the balance sheets of hundreds of Indian steel companies.
- metaljunction »
- Metal News
Metal News & Events
METALJUNCTION PUBLICATIONS
Coal Insights (English) Monthly
Coal Insights is a ready reckoner for anyone associated with coal. This publication is aimed at tracking everything related to coal in India.
India Coal Market Watch(English) Monthly
ICMW is a one-stop source for all news, data and research pertaining to coal demand, consumption, stocks, spot- and long-term prices with respect to the Indian Market.
India Steel Market Watch (English) Monthly
ISMW is a brand new high-end steel market report, covering all aspects of the steel industry in India.
Steel Insights(English) Monthly
Steel Insights delves into various facets of the domestic and global steel industry such as market fundamentals, raw material price trends, price forecasts etc.