Bajaj Hindusthan Sugar has sought shareholders nod to hive of its investment in thermal power generating firm Lalitpur Power Generating Company Limited (LPGCL) to Bajaj Energy Limited as part of its efforts to de-leverage the company.
The company plans to sell a 17.51 per cent stake in the power firm where the cost of investment is estimated at Rs 770.13 crore. It has convened an extraordinary general meeting on August 4 to discuss this. The fair market value of the 1.54 crore shares held by the company is estimated at Rs 1,097.53 crore.
The company is struggling with high debt, accrued on account of a cyclical downturn in the sugar industry hit by high cane prices, surplus production, high inventory and low realisation.
Lenders have already put the company under debt restructuring schemes – under the JLF route in 2014 and subsequently under the S4A scheme in 2017.
The company’s regulatory disclosure shows that according to the S4A scheme, the total fund-based debt was Rs 8,284.59 crore, of which 57.81 per cent was sustainable (can be serviced according to the existing terms and conditions), while the remaining 42.19 per cent was unsustainable debt.
“The company is under obligation to divest its non-core assets according to the terms and conditions of the master restructuring agreement dated December 30, 2014 and master framework agreement dated December 16, 2017, executed with the lenders to implement the debt restructuring scheme for the company,” said Bajaj Hindusthan in a filing on the stock exchange.
Under the restructuring scheme, the company is required to bring back the funds invested in LPGCL, which shall be used in accordance with the direction of the lenders.
LPGCL has completed the work to set up its 1980 MW (3×660 MW) coal-based supercritical thermal power project at Lalitpur district in Uttar Pradesh and it is operating with full capacity since December 2016.
Bajaj Hindusthan is headed by Kushagra Bajaj, son of Shishir Bajaj. The company in its filing said it has incurred losses during financial years 2011-12, 2012-14 (18 months), 2014-15, 2015-16 and 2017-18 because of lower realisation in the sugar business, resulting in increase in debt levels.
Bajaj Hindusthan has 14 mills in Uttar Pradesh with cane crushing capacity of 1.36 lakh tonnes per day. Besides sugar, the Bajaj group has interests in power, ethanol, real estate, personal care products and infrastructure.
The group’s power venture includes Bajaj Energy, with 450 MW thermal power generation commissioned in 2012 and LPGCL with a total of 1,980 MW thermal power generation capacity.
At Rs 6.45, the scrips of the company were down 2.21 per cent over the previous close at Bombay Stock Exchange.
News Source : The Telegraph