The National Company Law Tribunal (NCLT) has declared the Sandeep Jajodia-promoted Monnet Ispat insolvent, following a fierce battle with its lenders.
The board of Monnet Ispat stands dissolved and the company’s ownership goes into the hands of an interim resolution professional who will initiate the insolvency process.
Insolvency professionals said the Sajjan Jindal-promoted JSW Steel could now submit a bid for acquisition of the company. “The first action to be undertaken by the interim resolution professional is to issue an advertisement seeking bids from interested buyers,” said an insolvency professional.
A questionnaire to the Monnet Ispat spokesperson went unanswered.
In a previous hearing of the NCLT, Mumbai, held last week, Monnet Ispat had contested the loan amount and had stated it was in talks with JSW Steel for a sale. While the creditors claimed the amount in default was Rs 2,243 crore, the company said it had defaulted on Rs 1,539 crore. The NCLT rapped State Bank of India, the primary lender to Monnet Ispat, for not presenting the actual picture on the liabilities of the company. SBI had to revise its petition, which was admitted.
The debts of Monnet Ispat swelled to Rs 12,500 crore during a slowdown in the steel industry and after its coal mines were de-allocated. The company’s attempts at restructuring its debt also failed.
JSW Steel had in February made an offer to acquire a stake in Monnet Ispat. Though the offer still stands, the joint lenders’ forum headed by SBI has not approved it.
Monnet Ispat is one the 12 accounts identified by the Reserve Bank of India (RBI) for insolvency proceedings. Empowered by the Banking Regulation (Amendment) Ordinance, the RBI constituted an internal advisory committee, which after its first meeting on June 12, agreed to focus on large non-performing accounts in the banking system. With this order, Monnet Ispat has 180 days, with an extension of 90 days, for restructuring. If it misses the deadline, the company’s assets will be liquidated.
Monnet Ispat had a consolidated net debt of Rs 12,000 crore on March 31, 2016. Its debt-equity ratio is 9.26, it has been making heavy losses for a couple of years, and its net worth has been eroded significantly.