MSP Steel & Power Limited (MSPL) has taken a significant step towards financial recovery, receiving approval from major lenders for the payment of Right of Recompense (RoR), paving the way for its exit from the Corporate Debt Restructuring (CDR) framework.

Lender Approvals and RoR Payment

The company announced that key lenders, including State Bank of India (SBI), Bank of Baroda, and Indian Overseas Bank, have approved the RoR amount and issued confirmation letters. These approvals mark a crucial milestone in MSPL's journey towards financial stability and growth.

Background of Debt Restructuring

MSPL's borrowings were initially restructured under a CDR package led by SBI during the financial year 2014-2015. Subsequently, in FY 2017-2018, the package underwent further restructuring under the Scheme for Sustainable Structuring of Stressed Assets, with the consortium of lenders extending concessions to the company.

Calculation and Approval Process

As per the restructuring terms and RBI guidelines, MSPL became liable to pay the Right of Recompense to the lenders upon improvement in its financial performance. The consortium of lenders, led by SBI, appointed a consultant to calculate the RoR amount. Based on this calculation, the aforementioned banks have approved the RoR amount.

Board Approval and Next Steps

MSPL's Board of Directors approved the payment of RoR to all consortium lenders in a recent board meeting. The company is awaiting approvals from the remaining lenders, which are expected shortly. Upon receiving these approvals, MSPL will proceed to complete the payment to all lenders.

Implications for MSPL's Future

The exit from the CDR framework represents a significant milestone in MSPL's turnaround journey. The company stated that this development is expected to create new opportunities for growth and expansion. By fulfilling its RoR obligation, MSPL demonstrates its improved financial health and commitment to meeting its financial responsibilities.

Conclusion

As MSPL prepares to close this chapter of financial restructuring, the company looks forward to a future of potential growth and expansion. The successful exit from the CDR framework, once completed, will mark a new beginning for MSP Steel & Power Limited in its ongoing journey of financial recovery and business development.

MSP Steel & Power Ltd. has released its financial results for the first quarter of the fiscal year 2025-2026, showcasing a mixed performance with significant improvements in profitability despite a slight decline in revenue.

Financial Highlights

Improved Profitability

Despite the revenue decline, MSP Steel & Power demonstrated remarkable improvement in its bottom line. The company's net profit saw a significant jump, more than doubling from the same quarter last year. This boost in profitability can be attributed to enhanced operational efficiency and improved EBITDA margins.

Operational Performance

The EBITDA margin expansion from 5.60% to 6.32% year-over-year indicates the company's success in managing costs and improving operational efficiency. This improvement in margins has played a crucial role in offsetting the impact of reduced revenue on the company's profitability.

Revenue Challenges

While the company showed strong profit growth, it faced challenges on the revenue front. The decline in revenue from ₹7.72 billion to ₹7.10 billion suggests potential headwinds in the steel market or changes in product mix and pricing strategies.

Corporate Governance Updates

In addition to the financial results, MSP Steel & Power made several key appointments:

• M/s. S K Agrawal and Co Chartered Accountants LLP as Internal Auditor for FY 2025-2026
• Mr. Sambhu Banerjee as Cost Auditor for FY 2025-2026 (subject to shareholder ratification)
• M/s. Bajaj Todi & Associates as Secretarial Auditor for a five-year term from FY 2025-2026 to FY 2029-2030

The company also reported no defaults on loans and debt securities for the quarter, indicating a stable financial position.

Conclusion

MSP Steel & Power's Q1 FY2026 results demonstrate the company's ability to enhance profitability despite revenue challenges. The significant improvement in net profit and EBITDA margins showcases effective cost management and operational efficiency. As the company navigates the dynamic steel market, investors and stakeholders will be watching closely to see if this trend of improved profitability can be sustained in the coming quarters.