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June 4, 2001
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Money > Business Headlines > Report June 4, 2001 |
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SBI blocks Lloyds restructuring planRumi Dutta The proposed restructuring of the Lloyds Group steel companies-Lloyds Steel and Lloyds Metals-has hit a roadblock. Despite the approval of financial institutions, banks led by the State Bank of India have opposed the restructuring scheme. Lloyds Group chairman Mukesh Gupta said, "The restructuring exercise envisaged would have enhanced our operational efficiency. But it does not look like it will materialise now." The group, in consultation with Ernst & Young and under the guidance of ICICI and IDBI, had drafted a recast plan wherein the engineering division of Lloyds Steel and the cold-rolling division of Lloyds Metals was to be demerged into Encon Technologies. At the same time, the steel division of Lloyds Steel and the pipes & sponge iron division of Lloyds Metal was supposed to be amalgamated into Insco Steel. Gupta refused to divulge any further information on the issue, but added that the scheme has been put on hold. Senior institutional officials said, "Lloyds Group's restructuring package, though cleared by the institutional lenders, was opposed by SBI. We have been in talks with SBI but nothing has yet been outlined regarding the steel companies' proposal." The reason for SBI's objection could not be ascertained. The group had even conducted a valuation of its group companies. The swap ratio worked out was: for every 100 equity shares held in Lloyds Steel, 75 equity shares of Encon Technologies and 28 equity shares of Insco Steel were to be issued. Insco Steel would have been Lloyd's core business and Encon Technologies was identified to be non-core. Lloyds Steel and Lloyds Metals would have ceased to exist as operating companies had the proposed restructuring gone through. Gupta said the company is open to a possible merger or alliance with other steel companies. "Consolidation is the name of the game in the steel industry today. We are open to merger opportunities that will augment operational efficiency and drive us towards better performance." The company is yet to recover from the steel sector recession, though most of its rivals barring Sail, appears to be well out of it. In 1999-00, the company made losses of Rs 2.645 billion and had outstanding loans of Rs 17.36 billion as of March 31, 2000. Powered by YOU MAY ALSO WANT TO READ:
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