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Vedanta Star takes over Electrosteel Steels Limited

Vedanta Star takes over Electrosteel Steels Limited

04 Jun 2018

Source:  STRATEGIC RESEARCH INSTITUTE, STEELGURU

Electrosteel Steels informed BSE that Vedanta Star Limited, wholly owned subsidiary of Vedanta Limited, has on June 4th 2018 deposited INR 5,320,00,00,000 in an escrow account of the company and that June 4, 2018 has been determined to be the Effective Date under the Resolution Plan and the board of directors of the Company has been reconstituted. The newly constituted Board of Directors includes Mr Prasun Kumar Mukherjee (Independent Director), Mr Naveen Kumar Singhal (Non-executive Director) and Ms Rashmi Mohanty (Non-executive Director)

a. Conversion of debt into equity share capital of the Company:
An amount of INR 7399,13,20,550 due to the financial creditors shall be converted into 739,91,32,055 fully paid-up equity shares of INR 10 each of the Company, which shall be issued to the financial creditors in proportion to their respective portion of the debt;

b. Capital Reduction and Consolidation of the share capital:
The existing equity shares of the Company i.e. 240,92,35,023 of INR 10 each and the New Equity Shares issued pursuant to conversion of debt i.e. 739,91,32,055 of INR 10 each shall stand reduced by reducing the face value of the equity shares, from INR 9808,36,70,780 divided into 980,83,67,078 equity shares of INR 10 each fully paid-up to INR 196,16,73,416 divided into 980,83,67,078 equity shares of INR 0.20 each fully paid-up. Immediately thereafter, 50 (fifty) equity shares of INR 0.20 each as reduced shall be consolidated into 1 (one) fully paid-up equity share of INR 10 each;

c. Issue of equity shares to VSL
VSL shall be issued and allotted 176,55,06,078 fully paid up equity shares of INR 10 each of the fully diluted share capital of the Company. Upon allotment of the aforesaid equity shares of the Company, VSL will hold 90% of the paid up share capital of the Company. The remaining 10% of the Company’s share capital will be held by the Company’s existing shareholders and the financial creditors who receive shares in exchange for the debt owed to them.

d. Payment of Upfront Payment to Financial Creditors
Simultaneous to the issuance of the shares to SPV, the upfront payment of INR 5320,00,00,000 will be remitted to the creditors from the Escrow Account.

e. Delisting
As an integral part of the Resolution Plan, the Company would stand delisted. The financial creditors holding shares of the Company and existing shareholders holding equity shares shall be offered an exit at a price which shall be calculated as per the Resolution Plan.


Mr Mukherjee held the position of Executive Director of Sesa Goa and the Vedanta Group’s Iron Ore business from 2006 to 2014. He joined Sesa Goa Limited in 1987. He has 37 years of experience in finance, accounts, costing, taxation, legal and general management. Mr Mukherjee has a bachelor’s degree in Commerce from Calcutta University.

Mr Naveen Kumar Singhal is the Chief Executive Officer of Vedanta Group’s Iron Ore business. He joined Vedanta in 2003 and has been instrumental in driving the growth projects in Hindustan Zinc. Mr Singhal has a bachelor’s degree in mechanical and industrial engineering from IIT, Roorkee and has a post graduate diploma in industrial engineering and management from NITIE, Mumbai.

Ms Rashmi Mohanty Heads the Group Investor Relations function at Vedanta. She is a finance professional with over 23 years of experience in treasury and investment banking functions across various companies and finance roles. Rashmi has an bachelor’s engineering (Computers) degree from Delhi University and is an MBA from IIM Bangalore.

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