Mumbai, Sept. 16: Ispat Industries Ltd has decided to write-off its investments in its two subsidiaries—Central India Coal Company Ltd (CICCO) and Central India Power Company Ltd (CIPCO).
The promotional expenditure amounting to Rs 62.96 crore incurred till date on the two ambitious projects initiated by the Mittal group company along with other partners has been written off as an “extra-ordinary item” as they are “no longer considered recoverable by the management”.
The decision was taken after the coal project was shelved and the implementation of the power project became uncertain due to delays.
Ispat Industries, which is currently in the midst of a drastic reshaping of its finances and a restructuring exercise, has lately been coming out of other businesses and focussing more on its core competence. In line with its restructuring package, Ispat’s equity capital has been reduced by 50 per cent and 0.0001 cumulative redeemable preference shares will be issued for the amount so reduced. Under the package, term loans from institutions and banks aggregating to Rs 510 crore will be converted into equity shares of Rs 310 crore and non-cumulative convertible preference shares of Rs 200 crore.
The company has identified iron and steel products as its sole operating segment, which it now treats as its “primary segment”. It has also demarcated its revenue earnings under two headings—Indian and overseas.
However, the move to shelve the other two businesses in the energy sector—CICCO and CIPCO—may have had little connection with its resolve to focus on the iron and steel segments.
With the new strategy in place, the company recently decided to sell a significant part of its stake in its telecom venture Hughes Tele.com, a basic teleservices company operating in the Maharashtra and Goa circles.