May sell 35% stake in Orissa mine to Bhushan: Monnet Ispat

Monnet Ispat is in discussion with Bhushan Steel to sell its entire 35 percent stake in Orissa Sponge Iron & Steel Ltd (OSISL), which owns iron ore reserves in the Odisha, Monnet's Group CFO Ajay Bhat told CNBC-TV18's Latha Venkatesh and Sonia Shenoy.While refusing to divulge valuation details, Bhat said the stake sale would help the company cut its debt. Alongside, Monnet has also finalized sale of its power business to JSW Steel, a deal that is expected to close in December and will take off that business' Rs 4,000-crore liability off Monnet's books, Bhat said.Monnet's net debt, after the sale of the power business stands at Rs 7,000 crore, which will further reduce following stake sale in the Odisha mine company, he added.Monnet is in talks with lenders to restructure part of its debt and does not foresee an immediate payments crisis, according to the CFO.Excerpts from the interview on CNBC-TV18. Please watch video for the full discussion.Latha: Tell us what is the status of your stake in Orissa Sponge? Have you all come to any conclusion with Bhushan Steel and are you on the verge of selling it?A: We have been discussing with them. We hold about 35 percent stake in their company along with Mohanty\\'s. Mohanty\\'s hold about 22 percent so this 58 percent stake that we are in discussion with Bhushan Steel and we want to exit this company because they are in Odisha. We have said in the past there have been some legal disputes between Bhushans and [OSISL promoter] Mohantys and the company. It has been going on for the last two or three years. Commercially also we have evaluated the proposal it makes more sense for Bhushans to acquire this company. The discussions are at the advance stage. We should be able to conclude something out in the next 30 days.Latha: So Bhushan is buying both you all and Mohanty out?A: Yes. Latha: Any ballpark valuation that you can give us?A: We have not reached any valuation figures frankly. Right now it would be difficult for me to talk about anything. The difficulty is that steel is in a very bad shape today and every company they have to tie up money and unless they tie-up the money there are no commitments either from their side or from our side. So, the deal will fructify only once there is a clarity and visibility in terms of the availability of money from their side. So, the timeline they have suggested us would be something like September or may be October by which time and then we can sit down and actually sought it out.Sonia: There are some reports suggesting that your stake this 35 percent stake that you own could be valued at around Rs 750 crore. Is that a reasonable assumption?A: If you value the company definitely it carries a value because it is huge mine about 175 million tonne of iron ore reserves. It doesn’t have any debts, their debts are just about Rs 200 crore. Even in the current downturn of the industry if you value this company the valuation could be in the region of around Rs 4,000-5,000 crore. Having said that frankly there are speculations around about any number but I wouldn’t be able to talk about any number right now. I am sorry for that because we have not frozen anything so you can speculate anything. Latha: Is it a functioning mine?A: It is not a functioning mine but it has received most of the approvals. It is currently under the forest approval stage and we believe that over the next 8-9 months or max within 12 months we should be closure to sign the mining lease.