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As part of its corporate debt restructuring (CDR) programme, Kolkata-based steel maker Visa Steel has decided to sell 49 per cent of its stake in its subsidiary Visa Coke (its 400,000-tonne capacity coke oven battery) to New York-listed SunCoke Energy for Rs 368 crore.
Vishambhar Saran, chairman of Visa Steel, said, “This is a great opportunity for Visa Steel to partner with SunCoke, known for its operating and technological expertise, to grow the coke business.”
In October, Visa Steel had transferred the coke oven assets to Visa Coke.
Saran said, “The demand for coke from large and medium steel producers has been increasing substantially, and there is a potential to grow the coke business on a standalone basis.”
The transaction is expected to close in the first quarter of 2013, subject to customary conditions, including approval from Visa Steel shareholders, Visa Steel said.
On September 28, 2012, Visa Steel had said that the board had approved the restructuring of the company’s debt and that it had formally entered into a CDR programme with its lenders on September 25. Now, as part of the efforts to restructure the company and its debt, the company is undertaking efforts to sell off assets and extending loan maturities.
Visa Coke is responsible for running its coke-oven battery and buying of coke for its steel plant. Coke is an important raw material to make steel and coke-oven battery converts coking coal into coke, which is then used in the blast furnace to make steel.
Visa Steel has been suffering considerable losses for the past few quarters. In FY12, the company posted a net loss of Rs 118.85 crore. In the current fiscal, the firm recorded a net loss of Rs 108.67 crore in the first quarter alone, followed by a loss of Rs 36.73 crore in the quarter ended September 30, 2012.
The company has a fully integrated 500,000 tonne special steel plant in Odisha. The plant includes a coke oven plant. Prior to the stake sale, Visa Steel had plans to double this capacity.
Apart from this flagship plant, the company had plans to set up a 2.5-million tonne steel plant and a 500 MW power plant at Raigarh, Chhattisgarh. The company has already acquired 280 acres of land out of the total need of 1,000 acres and the plant has got the environmental clearances.
The company had also said that it would set up a 1.25-million tonne steel plant with 100,000 tonne manganese alloy plant, and a 300 MW power plant in Madhya Pradesh.