Electrosteel Steels’ board of directors has passed on for shareholder approval the Strategic Debt Restructuring (SDR) package agreed on by the Indian steelmaker’s creditors. This would see INR 2,507 crore ($375.5 million) of debt converted into equity shares amounting to at least a 51% stake in the firm

Under the Reserve Bank of India’s SDR guidelines announced in June, lenders to a struggling company can convert their loans into a majority stake. The lenders also consequently have the right to divest their equity holdings to a new promoter. Lenders to Monnet Ispat and Energy were the latest to avail of this option last month (see Kallanish 1 December).

Electrosteel’s board has also approved an increase in authorised share capital pursuant to the SDR Package although it is still subject to approval by shareholders. The firm’s shares on BSE jumped over 7% after the news that lenders had approved the SDR package.

Electrosteel is reported to have accumulated substantial debts after undergoing corporate debt restructuring since 2013. The firm’s standalone net sales in the year through March 2015 surged 281% on-year to INR 178,982 lakh ($279.8m). Net loss after tax and minority interest, however, deepened -114% to INR 62,404 lakh owing to greater expenses. The firm is a 2.5 million tonnes/year blast furnace-based rebar, wire rod and ductile iron pipe producer.