State-owned Oriental Bank of CommerceNSE -0.20 % (OBC) has dragged Mittal Corporation to the National Company Law Tribunal to begin bankruptcy proceedings against the steelmaker.
The bank is the lead lender in a consortium of a dozen banks, including State Bank of India, Punjab National Bank, IDBI Bank, Corporation Bank, Canara Bank, and Exim Bank, which has a collective claim of Rs 1,100 crore, said two people familiar with the matter.
The case will now be heard on April 24 at NCLT’s Mumbai chapter.
OBC is the lead lender with Rs 244 crore loan exposure, said one of the persons cited above. There are two other operational creditors, including Manohar Manak Alloys and Jindal Steel & Power, which have started similar proceedings in Mumbai NCLT.
Emails sent to Mittal Corp and OBC remained unanswered until the publication of this report. Other banks could not be reached immediately.
“Oriental Bank of Commerce has to recover the sum (Rs 244 crore) from Mittal Corporation,” said Nishit Druva, managing director at MDP Partners, a legal firm. “The company has failed to repay its dues, prompting my client (OBC) to file an insolvency application.”
Mittal Corp, the flagship company of the group, is the steel maker having manufacturing facilities in Pithampur, Madhya Pradesh. According to the company Web site, its current installed capacity is 120,000 TPA.
Factory land situated in Madhya Pradesh has been given as a security against the loan, said one of the persons cited above. Company directors including Karan Mittal, Dinesh Agarwal and Puranmal Agarwal provided personal guarantees.
The state-owned bank has been proactively driving efforts to resolve bad loans. Last month, the bank filed another bankruptcy application against Lotus Auto Engineering, an Amtek group-owned company. That case would now be heard on April 17. The company collectively owes about Rs 650 crore (including interest) to a group of lenders including OBC, Central Bank of India, Saraswat Co-operative Bank.
OBC’s gross bad loan ratio rose to 16.95% in December quarter this financial year compared to 13.8% in the corresponding quarter a year ago.
Source: Economic Times