The concerned group is a closely held public limited company, which began its operations in 2003. The group manufactures and markets thermo-mechanically treated (TMT) bars under 3 subsidiary brands. Its manufacturing facility is in Ghaziabad (Uttar Pradesh).
The company had a banking arrangement with a set of 2 PSU lenders, enjoying facilities to the tune of INR 450 Mn.
Due to inherent issues in the steel sector as well as issues of default within the group’s extended portfolio, the company was being charged higher rates, despite its performance being satisfactory.
The company reported a decline in sales in the financial year under assessment. To aggravate things further, one of the lenders came under the PCA framework, thus making day to day operations difficult.
Re-arrangement as well as refinancing of debt with a holistic exit strategy for the flagship brand of the group company and ensuring its business growth.
The transaction resulted in the consolidation of bank limits, with reduction in ROI of more than 250 basis points, thus ensuring higher profitability as well as operational convenience for the company.