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Losses at up to 22 times m-caps! These stocks are in bottomless pit

NEW DELHI: Not all is well with debt-ridden companies headed..

NEW DELHI: Not all is well with debt-ridden companies headed for bankruptcy action. The underbelly is clearly showing, to be sure. Which is, losses stand much much higher than their market capitalisation.

This might just be the tip of the iceberg. As many as seven debt-afflicted companies — most of which are staring at insolvency proceedings — have run up massive losses for 2017-18. That's up to 22 times their prevailing market capitalisation (m-cap).

These firms may have at least Rs 500 crore sales for the year to flaunt, but losses speak for themselves — for the fourth year in a row.

Adhunik Metaliks is one. Its net loss of Rs 1,017 crore for FY18 came on Rs 709 crore sales. The loss is 22.13 times higher than the company's total m-cap of Rs 45.94 crore.

M-cap denotes a company's market valuation.

The company was incurring losses and consequently, the net worth has eroded completely, with the current liabilities exceeding the current assets, the independent auditor that prepared the company's financial statement for FY18 said.

The company was admitted to insolvency resolution process, but no resolution could be approved within the stipulated 270-day deadline. This prompted the resolution professional (RP) on April 29 to seek 20 additional days for completion of the process.

"If the said application is not allowed or if there is no resolution plan approved even after allowing the said application by the National Company Law Tribunal (NCLT), the company shall face the consequences of liquidation," the auditor report stated.

Adhunik, along with three other group companies, has defaulted on Rs 5,000 crore loan.

Uttam Value Steels is another case. It reported Rs 466 crore loss for FY18 on Rs 2,636.26 crore net sales, which is 3.71 times its m-cap of Rs 125 crore.

The lenders in question have referred the loan repayment default case to the NCLT for resolution and the petition has not been admitted so far.

Similarly, GTL Infra's Rs 454 crore loss for FY18 is 3.39 times its market value. Its lenders are looking to cut down their exposure to the company by selling the debt to asset reconstruction companies (ARCs).

Gujarat NRE Coke is on the same boat. The company, whose shares last traded on the BSE on February 9, suffered FY18 loss at Rs 427 crore — 2.8 times its market value.

Promoter Arun Kumar Jagatramka has filed an application proposing a composite scheme of compromise and arrangement between the company and its creditors. The NCLT this month has admitted the referred application and asked for convening a meeting of each class of creditors and shareholders on July 16.

McNally Bharat, Ballarpur Industries and Rattanindia Power are three other instances where annual losses have zipped past their prevailing market value.

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