Salient features of resolution plan OCL Iron and Steel

The Cuttack bench of the NCLT has approved the resolution plan by Indrani Patnaik for OCL Iron and Steel. The implementation of the plan will be done by the successful Resolution Applicant — Indrani Patnaik — under the supervision of the Monitoring Committee constituted in accordance with the provisions of the Resolution Plan.

Salient features of the Resolution Plan

As per the Resolution Plan, a total amount of Rs 261 crore will be paid to Financial Creditors as settlement of their admitted claims of Rs 2250.76 crore. Hence, the balance amount of Rs.1988.16 crore is unsustainable. The unsustainable debt is proposed to be converted into Equity Shares/Preference Shares with a face value of Re. 1 each, which shall be issued to the Financial Creditors in proportion to their respective portion of the Unsustainable Debt. Entire Equity/Preference shares issued to the Financial Creditors, pursuant to the conversion of debt into equity/preference shall be reduced by 99%.

Post the payment of ClRP Costs in the manner set out above in this Resolution Plan and the Liquidation Value or the amount proposed under the Resolution Plan whichever is higher, due to Operational Creditors, Workmen and Employees and Dissenting Financial Creditors as per Section 30(2)(b) read with Section 53 of the Code, the admitted Debt of Financial Creditors shall be paid and the same shall be distributed in the proportion agreeable to the CoC, subject to the maximum consideration agreed to be paid by the Resolution Applicant.

The Resolution Applicant proposes to infuse an amount of Rs. 10.00 crore to subscribe 10 Crore equity shares having face value of Re. 1 each. The RA will make the payment directly into the bank account of the Corporate Debtor. Upon receipt of the said sum, shares shall be immediately issued to the RA in accordance with the implementation timeline proposed under the Resolution Plan.

Equity shares held by the Promoter group equivalent to 5,14,94,284 shares of Re.1 each representing 35.44% shareholding in the Corporate Debtor, will stand fully extinguished as part of the Resolution Plan.

Existing Share Capital of the Public shareholding shall be reduced by 99%. The Public shareholders shall be given an option to opt for cancellation of equity shares and be paid compensation of Re.0.01 per share in lieu of cancellation of equity shares held by them, after capital reduction.

Shareholding Pattern after capital reduction

Category of Shareholders	Face value (Rs)	No of Shares	Value of share capital (Rs cr)
Promoters	1	Nil	Nil
Public	1	9,38,155	9,38,155
Resolution Applicant	1	10,00,00,000	10,00,00,000
Financial Creditors	1	198, 81,59,711	198,81,59,711

The RA, post the upfront payment to the financial creditors and upon acquiring control over the company, shall hold and preserve the Auto Division in their custody as a trustee for the financial creditors. The RA shall run an auction process for liquidating the auto division. For the above auction process, the RA shall appoint an auction agency after seeking prior approval from the financial creditors.

The RA shall, after successful completion of the auction process, remit the funds received from the buyer of the asset net of any auction fees paid to the Auction Agency and any other associated expenses to the assenting financial creditors.

About the Resolution Applicant

M/s Indrani Patnaik (the Firm) is a Sole Proprietorship Concern of Smt. Indrani Patnaik. The firm is primarily engaged in the business of iron ore mining in the state of Odisha and power generation through windmills located in the state of Rajasthan. Currently, the Unchabali iron ore mines under the M/s Indrani Patnaik brand cover an expansive area of 106 hectares at Unchabali in Keonjhar district of Odisha and has vast mineral reserves of superior grade materials. With the current production capacity of 4 million tonnes per annum, the firm started its first mining operation in the year 2008 and since then, it has achieved a massive turnover of Rs. 12,000 crores approx. till March’22. With its large scale operations and vast experience in the mining sector, M/s Indrani Patnaik has emerged as a trusted name in the mining industry of Odisha and nearby states having its customer base of top steel making companies including JSW Steel, TATA Group and Arcelor Mittal Group. The firm not only covers the domestic market but has also exported materials to the steel manufacturing regions across the globe.

Action Plan for ramping up the scale of operations of OCL Iron and Steel

The Resolution Applicant (RA) group is in the business of iron and steel and having presence in both domestic as well as international markets. The entire production of the Corporate Debtor shall be used towards the requirement of its existing customers. The operations of the company shut down on account of working capital constraints and inadequate funds/Capex requirements. To address the aforesaid constraints, the Resolution Applicant proposes to infuse equity/quasi equity/arrange funds for working capital/startup expenses and Capex. The RA also plans to use the current experienced technical team to help revive and turn around the operations and complete the installation of the plant and machinery and Capex requirements.

The RA shall identify the training requirements over to employees and impart necessary training to upgrade their skills. The Group has presence of over three decades in the steel industry. The Group has a strong presence in both domestic as well as international markets. The entire production of the Corporate Debtor shall be used towards the requirement of its existing customers. The RA is operating Unchabali iron ore mines under the brand name M/s Indrani Patnaik that covers an expansive area of 106 hectares at Unchabali in Keonjhar district of Odisha and has vast mineral reserves of superior grade materials. With the current production capacity of four million tonnes per annum, the firm started its first mining operation in the year 2008.

It will help the forward/upstream integration with the Company and will enjoy the following benefit; ⮚ Security of raw material supply;
⮚ Larger share of the value chain EBITDA pools captured;
⮚ Integrated mining operation benefiting midstream purchasing strategy and bargaining power for externally sourced raw materials;
⮚ Optimized operating parameters (value in use trade-offs) between upstream and midstream; ⮚ Integrated and optimized logistics system between upstream and midstream assets;
⮚ Ensuring market access for the products.

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