VISA Steel is operating a 225,000 TPA Blast Furnace, 300,000 TPA Sponge Iron Plant & 500,000 TPA Steel Plant through Electric Furnace route and 150,000 TPA Ferro Chrome Plant at Kalinganagar in Odisha.
VISA Steel had set up a Steel Plant in Odisha on the basis of assurance that captive Iron Ore and Coal mines shall be allotted as per MoU signed with Government of Odisha. The Captive Iron Ore and Coal mines would have ensured the long term supply of raw material at cost to the Plant and reasonable EBITDA margin.
However, the Deallocation of Coal block through Supreme Court Order in September 2014 and Notification of MMDR Amendment Act in March 2015 wherein captive mines can now be available through Auction only has deprived the availability of raw material at cost and increased dependence on OMC for supply of Iron Ore & Overseas supplies for Coal at auction/index prices. This has reduced the EBITDA margin potential from the business.
The EBITDA margins of VISA Steel have not been sufficient to service interest / principal repayment and the lenders have not disbursed sanctioned limits for operations and adjusted towards interest/repayment resulting in huge ballooning of liabilities of VISA Steel towards its lenders, which are much in excess of hard cost of investments in the project. Hence, the debt needs to be restructured to a sustainable level.