Coal news and updates

Monnet to re-bid for lost coal blocks despite financial worries

Despite concerns over its deteriorating solvency and liquidity profile, Monnet Ispat and Energy is gearing up to participate in the ensuing coal block auction to get back the lost mines, which were deallocated following the Supreme Court order in September.

"In the upcoming coal block auction we would first try to get back the mines which were de-allocated," chairman cum managing director Sandeep Jajodia told dna.

Jajodia ruled out any difficulty in serving his high debt level and said Monnet is comparatively well-placed in terms of debt levels.

"'We are a regular account, and quite well off in terms of debt compared with the industry. With 1.5 million tonne (MT) capacity we have a Rs 6,000 crore debt level which translates to Rs 4,000 crore a mt. The only thing we are concerned is how to optimise the capacities which we can't now due to depressed market conditions," Jajodia said on the sidelines of a meeting of industry body Assocham.

Rating agency Care recently downgraded Monnet's long-term bank facilities to a poor BBB- on the back of "significant decline in the company's profitability as well as cash accruals and deterioration in its solvency and liquidity profile during second quarter."

During the rating revision, the agency expressed apprehension over gearing ratio deteriorating from 2.46 times in March to 2.62 times in September due to debt-funded capex coupled with erosion in net-worth following net losses incurred in the first half.

"Higher debt levels and significant decline in profitability and cash accruals led to worsening of debt coverage indicators. The liquidity profile is also likely to be impacted in short term in view of the penalty imposed by the Supreme Court, which has to be paid by December 31," the rating agency had said in its November 28 report.

Monnet will now have to pay the penalty after its petition got rejected.

"We had filed a review petition as well as interim petition as one of our operating mines was underground. The CAG report had pointed out since underground mines are loss-making there is no loss to government. But the court didn't consider that," Jajodia said.

Monnet had earlier disclosed that the underground mine Milupara at Raigarh is being mined since 2004, supplying to its 1.5 mt steel plant and has so far extracted 8 mt of coal.

On the positive side Monnet is set to start operations at its new 2 mt pellet plant next month which will to large extent solve its raw material sourcing problems.

"The pellet plant is getting commissioned in 2-3 week's time. This solves some of our problems like bringing down our raw material costs as we don't need to buy iron ore lumps," he said.
 

Source: DNA