Monnet Ispat shares zooms 20 per cent on Selling Majority Stake in Odisha power plant

The shares of Monnet Ispat & Energy (MIEL) jumped about 20 per cent and locked in the upper circuit at Rs 42.75 on Friday (10th July) in BSE. This is in response to the MIEL's announcement of signing a non-binding Memorandum of Understanding (MOU) with JSW Energy, to sell majority and controlling stake of its subsidiary. Monnet power Company, which is engaged in the business of developing 1050 MW Coal fired thermal power and the plant is located at Malibrahmani, Angul Orissa. As per the media reports the deal is valued at Rs 3570 crore.

Earlier in June, the shares of the MIEL hit an eleven year low of Rs 27.30 as a result of the heavy losses incurred in FY15. The company reported consolidated net loss of Rs 857 crore for FY15, while in FY14 company registered a profit of Rs 37 crore. The company also informed BSE that, "During the year, the company paid a penalty of coal block de-allocation under the order of the Supreme Court aggregating to Rs 252.91 crore for the period 2004-05 to 2014-15, the same is written off as an exceptional item in Profit & Loss for the year 2014-15." The company reported continuous growth in debt across its businesses of steel, mining and power, which stood at Rs 11075 crore as on 31st March 2015, as a result the company incurred a finance cost of Rs 670 crores in FY15.

The stock price has lost about 93 per cent of its value in the past four and half years, from Rs 639 in Oct 2010 to Rs 42.75 on 10th July 2015 in BSE. We hope the deal of JSW Energy will give some breather to its investors and one can expect some improvements in its financial performance.

MIEL formerly known as Monnet Ispat (MIL) was incorporated on 1st February 1990. It was promoted jointly by Sandeep Jajodia and Jindal Strips. MIEL is the flagship company of Monnet Group with a business interest in manufacture and marketing of steel, sponge and ferro alloys. The Raipur sponge iron plant of the company was started with the capacity of 1 lac TPA in the state of Chattisgarh during the year 1994. The company currently manages manufacturing units for Sponge Iron, Steel Melting & Rolling Mill, Ferro- Alloys Plant, Power Generation units, Mining & Mineral Beneficiation of Coal, Iron Ore and other minerals.