Pula Steel under care and maintenance
Onalenna Kelebeile | Friday March 3, 2017 15:28
But the agency has revealed that the company has been placed under care and maintenance while its shareholders raise the required capital to transition it into a sustainable entity.
There have been allegations that CEDA and Government were sick and tired of the company’s chief executive officer, Ranvir Kumar Verma.
It is further reported that last year Pula Steel asked for a P20 million bailout and CEDA allegedly agreed, on condition that the management is changed and the Vermas removed as managers of Pula Steel. Grant Thornton Acumen was to be given a temporary management contract to carry out the day-to-day management of the company while recruitment for suitable managers continued.
Another condition is reported to have been that Grant Thornton Acumen recruits key managers and that other shareholders contribute to the bailout failing which, CEDA will increase its stake in the company through the P20 million bailout.
It is reported that at the end CEDA’s conditions were not met hence the P20 million bailout was not authorised.
In response, CEDA communications manager Leatile Bakwena said CEDA is not in a position to disclose issues concerning Pula Steel due to the fact that the agency is governed by strict confidentiality when dealing with its existing or potential clients.
The agency could not even be drawn into discussing whether it is aware that employees were at some point owed December and January salaries. “In its involvement with Pula Steel as a CEDA funded project, the agency has Board representation within Pula Steel Board and it is also a shareholder of the company. The agency has therefore been aware through these avenues of the status of Pula Steel operations including the fact that Pula Steel has currently ceased plant production,” he said. Bakwena added that all outstanding salaries are up to date.
On the issue of electricity cut at the plant due to unpaid dues and the fact that the company vehicles have been impounded by deputy sheriffs over unpaid dues to some creditors, Bakwena said CEDA as a shareholder is not involved with Pula Steel operations and referred all enquiries to Pula Steel management.
CEDA could also not be drawn into explaining the debt amounting to several millions of pula owed to BCL for the supply of scrap metals and plans in place to settle the debt. Pula Steel is among the customers that owe BCL a collective amount of P700 million. The provisional liquidator is monitoring the situation at Pula Steel to see if the money owed to BCL can be recovered once the plant starts operating.
Contacted for comment, director of corporate Services, Brian Mosenene said they never applied for funding from CEDA.
He said the shareholders brought in Grant Thornton Acumen to look at the whole Pula Steel management and restructure it, hence it will result in the deployment of management. He said it is possible that CEDA will be a major shareholder, but until the shareholders agreement is signed it is difficult to confirm that.
He could not be drawn into discussing conditions that were agreed with CEDA, citing confidentiality. Mosenene further confirmed that the plant has not started operations yet because there are protocols to be followed. He could also not respond on the attachment of the company’s property by creditors.
Pula Steel is the first company in the country to process scrap metal into intermediate products called billets and was a milestone under BCL’s corporate strategy Polaris II that hoped to expand the Mine’s portfolio to develop an iron production circuit. It was setup at a cost of P130 million plus an additional P53 million to ensure that it was delivered satisfactorily.
Mid last year the plant was placed under administrative closure for two months for failure to have a pollution control system in place and this translated to P4 million loss.
Last year November the Botswana Power Corporation disconnected its power supply to the plant, which rendered it unoperational while on the other hand deputy sheriffs impounded the plant’s vehicles.
Meanwhile CEDA has petitioned the High Court seeking to place Pula Steel under the management of a Judicial manager, and that Vijay Kalyanaraman be appointed as the Pula Steel Judicial manager.
The draft order also states that any proceedings by or against Pula Steel be restrained until August 4 this year when the court will determine if Pula Steel be discharged from Judicial management or otherwise.
The Judicial manager is also ordered to secure and preserve the assets of Pula Steel, ensure that Pula Steel will be able to meet its obligations to avoid winding up and to do all things necessary to preserve the interests of members and creditors.
The Judicial manager is expected to submit a report showing the assets and liabilities of the company and its debts and obligations to the meeting of the creditors that will be convened by the Master of the High Court by June 17.