ADM buys Deutsche Bank’s Rs360 cr loan to Sanghi Industries

ADM buys Deutsche Bank’s Rs360 cr loan to Sanghi Industries

Hyderabad / Mumbai: Asia Debt Management Hong Kong Ltd, or ADM, which specializes in managing distressed assets in Asia, has purchased a Rs360 crore loan that Deutsche Bank India had given cement maker Sanghi Industries Ltd, a senior official at the cement-to-media company said.

The loan to build the cement plant was guaranteed by British hedge fund Spinnaker Capital Partners Llc, which controls 25.01% of Sanghi Industries, owner of a 2.6 million tonnes (mt) cement plant in Kutch, Gujarat.

“The loan, and the corporate guarantee given by Spinnaker, have been transferred to ADM," Bina Engineer, Sanghi Industries’ chief financial officer and spokeswoman, said. Ravi Agarwal, Spinnaker India representative, declined to comment.

“Deutsche Bank wanted to sell this loan and we purchased it," a senior ADM executive said. He declined to be named because he is not permitted to speak to the media.

Sanghi Industries is currently caught in an internal feud, as the four promoters—brothers Anand, Sudhir, Girish and Ravi Sanghi, who own a 51% stake in the Rs867.35 crore company—are fighting for control.

The Company Law Board, an independent quasi-judicial body that decides on business family-related litigation in India, is now hearing a case between the brothers.

The transfer of the loan has only intensified the fight. “So far, officially, I am not aware of any official transfer of debt from one institution to the another," Sudhir Sanghi, a director of Sanghi Industries, said. “If it is true, then it is against the law since we were kept in the dark on a deal that needs our approval since we were also guarantors to the original debt arrangement through pledging of our holding."

Sanghi Industries is now run by Ravi Sanghi, who is the managing director. The company reported a net profit of Rs52.54 crore on a turnover of Rs867.35 crore for the fiscal ended March.

In the second quarter ended September, Sanghi Industries posted a net profit of Rs4.65 crore on revenue of Rs156.79 crore, marginally more than the Rs4.09 crore profit in the corresponding quarter last fiscal.

Spinnaker owns the stake in the company through its three funds—Spinnaker Global Strategic Fund (6.94%), Spinnaker Global Emerging Markets Fund Ltd (8.06%) and Spinnaker Global Opportunity Fund Ltd (10%). These funds have been closed for investment, according to the company’s website.

ADM, set up in 1998 by a team of investment bankers following the Asian financial crisis, manages nearly $1.9 billion (Rs8,835 crore) through ADM Capital in five funds that buy loans from existing creditors.