Ispat Industries steel plant closed due to cash crunch; bourses not informed
Moneylife Digital Team 01 December 2010

The steel plant of Ispat Industries at Dolvi, Maharashtra has been closed for over a month due to a cash crunch. But the company has not bothered to inform the stock exchanges

Ispat Industries, which has been subjected to a massive countrywide raid by the revenue intelligence wing of the Central Board of Direct Taxes (CBDT) in the past 24 hours, is in an acute cash crunch. The cash crunch has forced the closure of the company's electric arc furnace in Dolvi, Maharashtra, which has a capacity to make 3.3 million tonnes of steel and also the cold rolling and galvanizing mill at Kalmeshwar, near Nagpur.

Amazingly, the mill has remained closed from 3rd November but the bourses have not been informed. Moneylife contacted the company, the Bombay Stock Exchange (BSE) and the Securities and Exchange Board of India (SEBI) to find out whether the exchange and the regulator had been informed of this material change but received no reply till the time of writing.

Yesterday, The Economic Times reported that Ispat is up for sale and will possibly be bought by Arcelor Mittal. Based on the report, the Ispat Industries stock gained 12% yesterday and another 4% today to close at Rs18.65 on the BSE. The media has been writing about a possible change of control in Ispat regularly. Each of these reports has turned out to be untrue. The stock, however, jumps sharply on such reports, which possibly helps some well-placed speculators.

Ispat has been making continuous losses for the past many years and in the September quarter again it reported a massive loss. The company lost Rs332 crore compared to a loss of  Rs79.4 crore in the corresponding quarter last year.

While Ispat has been perpetually starved for cash, in November news reports quoted Vinod Garg, executive director, commercial, as saying that the company will raise steel production capacity to 4.2 million tonnes per annum (MTPA) from 3.3 MTPA.

Comments
M.C.Aggarwal
1 decade ago
A thorough inquiry may be conducted,this will be also a scam.The management of company have murdered lacs of poor share holders--JITE JI MAR DIYE,the persons playing havoc with poor public should be treated like - well konwn all.
pantulu
1 decade ago
As I indicated in my earlier comment the present system is helping only the speculators . Is it not funny that the shares of a closed company are traded with no information to anybody?It is high time the share value is directly linked to the performance of the company. It means the share value will be near zero in the present case. Otherwise speculators play havoc and ordinary people suffer due to their misdeeds.
Dilip Ghosh
1 decade ago
Pramod Mittal is a great Bokachoda
V Jayaraman
1 decade ago
This is utterly disgusting. I have gone through the notices filed by the company with the stock exchanges. There is no reference to this key issue. Further on Nov 12, 2010, S.R. Batliboi & Co (auditing firm representing Ernst & Young) indeed provided a Limited review report for the period upto Sep 30, 2010 wherein they had not even stated the present condition of the plants. These reports are anyway concocted and are prepared in the cosy AC cabins with scant interest towards providing the information at the ground level. I think it is high time this is reported to Stock Exchanges.
rakesh
Replied to V Jayaraman comment 1 decade ago
what is bhave, madhu kannan and ravi narain doing?
no prizes for guessing
Prithviraj
1 decade ago
While allover world ispat Industries shows profit , IIL shows loss of billion of Rs continuousely since past many years, Its clear that it might have shown its exp. high and in the way of some cap exp. Ans also it shows that some where its cash flow is blocked. I think all this will come out through this raid
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