India inc’s recipes for disaster

When this paper tried to reach the company, nobody responded and its offices were closed.

ISPAT PROFILES: Part of the Ispat group managed by Pramod Mittal, who is the brother of Lakshmi N. Mittal. Here it was plain miscalculation and bad luck. The project was set up considering the demand from the Railways, as the Bhilai Steel Plant was unable to meet the demand. Two things went wrong. The Railways slashed its rail-procurement tonnage due to budgetary constraints. And, in the low-head bloom caster, lubricating powder got trapped on the surface of the bloom, which then had to be scarfed at an added cost of 8-10 per cent before rolling. The net result was high costs, a high percentage of scrap, and low capacity utilisation. Losses accumulated.

When contacted, a company spokesman said the company is lying closed since 2001 and is in the BIFR books. “We are awaiting a CDR package from the banks and financial institutions,” he said.

MAFATLAL INDUSTRIES: The fortunes of 92-year-old Mafatlal Industries — belonging to the Arvind Mafatlal group — took a severe beating due to the recession in the textile sector. Its units are now lying closed. It’s in the BIFR fold. But there’s a bonanza for the company: real estate in both the Lower Parel and Mazgaon plants in Mumbai. If it manages to sell real estate, the proceeds would give some relief.

‘‘The losses were in the past and the company is under restructuring. We hope to come out of it,’’ says Prem Malik, CEO of Mafatlal Industries.

SOUTHERN IRON & STEEL: The company is now controlled by the Jindal group since 2004. This is the first integrated steel plant set up in Tamil Nadu and was initially promoted by LMW and TIDCO in the associate sector. Set to produce pig iron and billets besides facilities for steel-making and steel-finishing, the Siscol project has run into rough weather at a time when it has neared the final stages of completion.

There was project cost overrun and the capacity was not optimum.

‘‘The liquidity position of the company has significantly improved during the current fiscal year. It is also implementing an expansion project of Rs 400 crore. The company is now making various efforts to reduce the cost of production,’’ says the company.

ATV PROJECTS: Promoted by ATV Group of the Chaturvedis. The company is engaged in project supplies and engineering services. The plants are located in Nagothane (Raigarh, Maharashtra). The company is a sick industrial company and IDBI is the operating agency. The company raised money through public issues and defaulted on bank loans.

The company did not respond to faxed questionnaire and repeated telephone calls.

BIRLA VXL: You can also see the Birla name in the wealth destroyers list. SK Birla’s flagship company Birla VXL Ltd (BVL) is in the final stages of a complex financial and business restructuring. Shareholders had okayed the proposal at their meeting recently. Asset reconstruction firm ARCIL is already calling shots at SKB’s soda ash company Saurashtra Chemicals Ltd (SCL) and arranging for divesture of its soda ash business. Another group company, Mysore Cements, is sick and has applied with BIFR last year.

‘‘In our case, brand recall, quality perception, basic margins, quality of assets are positive features. We could get a right understanding in terms of sustainable level of debt-restructuring and a reasonable repayment schedule,” said Anand Parekh, senior president and CEO.