ICCL to merge arm in debt recast
TIMES NEWS NETWORK [ THURSDAY, DECEMBER 18, 2003 01:52:31 AM ]

NEW DELHI : The Orissa-based Indian Metals and Ferro Alloys (IMFA) is set to merge with group company Indian Charge Chrome Limited (ICCL). The company’s promoters have initiated action on the merger in terms of regulatory and other clearances, though no time frame has been set for the process, ICCL joint managing director Shubrakant Panda said. The merger was one of the conditions set by term lending institution IDBI before clearing a corporate debt restructuring (CDR) package for ICCL.

The company owes IDBI about Rs 500 crore. The CDR envisages a reduction in ICCL interest rate from 17.5% to 10% per annum, and has allowed a 13-year payback period. IDBI plans to convert part of its debt of about Rs 45-50 crore into equity in the company.

Meanwhile, ICCL is also simultaneously planning to bring in a strategic investor to take a `reasonable’ stake in the company, Mr Panda told ET. The company is continuing talks with commodities trader Marubeni and some other players. The approval of the CDR package by the lenders makes the entry of a partner more likely, he added.

IMFA, located in the Rayagada district of Orissa, is a closely held company with the promoters and companies acting in concert holding 98.9%, the remaining 1.18% is with the public. The company manufactures ferro chrome, and ferro silicon apart from mining chrome ore and quartz. It made a profit of Rs 9 crore in 2002-3 and is no longer listed on the stock exchanges.

ICCL, which produces only ferro chrome, has been facing a severe financial crisis ever since its ferro chrome conversion agreement with Tata Steel ran into rough weather in the mid-nineties. However, after managing to wrest control of the captive chrome mines in Sukinda by end-1999, ICCL has now stabilised production, Mr Panda said. About 51.99% of the company is held by the promoters and people in concert, about 8.9% is held by NRIs, IDBI holds 4.5%, banks hold 5.6% and mutual funds and others make up the remaining stake. ICCL has a 108 MW, coal-based captive power plant. It exports about 50% of its ferro-chrome, though it was originally envisaged as a 100% export oriented unit. The company is the largest producer of ferro-chrome in India , with a production of over 1 lakh tonnes in 2002-3. The ICCL share closed at Rs 8.85 on the BSE today.

Ferro-chrome, is an important constituent in making stainless steel. High power costs have led to the closure of several ferro-chrome units in Orissa, a state that accounts for 98% of the country’s chrome ore deposits.