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Essar Steel output in Q2 slides by 15% QoQ – Report

Steel News - Published on Tue, 14 Nov 2017

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Press Trust of India reported that output of Essar Steel has dropped 15 per cent since the time the steelmaker was referred to the National Company Law Tribunal (NCLT). The report quoted sources aware about the development as saying that “Production, which was 1.57 million tonnes in the first quarter (Q1), has fallen by 15 per cent to 1.33 million tonnes in the second quarter (Q2) of the current financial year.”

Lower volume coupled with rising input costs has further eroded the profitability of the company. According to the sources, Ebitda (earnings before interest, taxes, depreciation, and amortisation) fell to INR 475 crore in the second quarter, from INR 750 crore in the first quarter of 2017-18.

The sources said “Essar Steel had been paying an average of INR 250 crore every month to lenders towards loan servicing. In the last financial year alone, it has paid close to INR 3,500 crore. Ever since the resolution professional (RP) took over the reins of the company, these monthly payments to lenders have stopped, which has affected the banks' recoveries. The lenders have turned down the RP's request for an additional debt of INR 1,000 crore to manage daily operations.”

At the time of the appointment of the resolution professional in July 2017, the lenders had insisted that there should be no impact on the company's performance. The remit was to improve performance of the company as a 'going concern' and preserve its value, the sources said.

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Posted By : Rabi Wangkhem on Tue, 14 Nov 2017
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