Calcutta, Sept. 7: Ess Dee Aluminium was in the final stages of negotiation with lenders to restructure its loan and infuse fresh equity when the company's chairman Sudip Dutta was arrested by Bengal police on alleged charges of provident fund default.
Backed by a commitment from SSG Capital of Singapore, one of the largest private equity firms of Asia, Dutta had landed in Mumbai on Tuesday to hold talks with the SBI, which has a 43 per cent share of a Rs 690-crore loan, and close the negotiations over the weekend.
Ess Dee had plans to open the factories before Durga Puja and start refurbishment work. It had also taken order from pharmaceutical major Lupin for the supply of medicine foil.
"Dutta was keen to start production in Devi Pokhyo. He lined up several meetings with banks, especially the SBI, to come to a settlement. His arrest will delay the plan and we may not be able start the plants before the Pujas," Debadeep Bhattacharya, director of Ess Dee, said from Mumbai.
The company, once the largest manufacturer of aluminium foil used in the pharmaceutical industry, could not operate any of its plants, including two in Bengal, because of lack of working capital.
Dutta, an NRI businessman who now lives in Singapore, brought in SSG that agreed to invest Rs 400 crore in debt and equity.
In his letter to Bengal chief minister Mamata Banerjee, Dutta had explained the revival plan, including the participation of the private equity entity.
Dutta had arrived at a settlement with Axis Bank, which held 17 per cent debt, before engaging with the SBI. A meeting with the joint lenders' forum was also expected next week.
Dutta and SSG were angling for a sustainable restructuring package to bring down the debt burden of Rs 690 crore that included principal amount, interest and penalties.
Ess Dee has been classified as a non-performing asset by several banks after it defaulted on repayment obligation, prompting lenders to invoke the Sarfesi Act.
The existing management claimed that a botched-up technology upgrade, involving an investment of Rs 550 crore with the help of a German entity during 2012-14, had brought Ess Dee to its knees. In the last annual report for the year ended March 31, 2016, Dutta had blamed the previous management for failing to execute the plan. Several directors, including the managing director, had stepped down.
The Hoera plant at Hooghly was the key cog in the revival plan. Employing around 200 workers, the erstwhile India Foils plant did not have labour issues like Kamarhati.
The Ess Dee stock, despite Dutta's arrest, was locked in the upper circuit today to close at Rs 36.45 on the BSE, a gain of 19.9 per cent.Dutta continues to remain in police custody.
as it is the only plant that makes aluminium sheet from ingot.
Employing around 200 workers, the erstwhile India Foils plant did not have labour issue like Kamarhati.
The Hoera plant at Hooghly in Bengal was the key cog in the revival plan as it is the only plant that makes aluminium sheet from ingot.
Employing around 200 workers, the erstwhile India Foils plant did not have labour issue like Kamarhati.
