Record number of cos in ‘lenders ICU’

FE :GEORGE MATHEW:3 April 2012

 

Mumbai: Stuck in a financial quagmire, an increasing number companies is seeking loan bailouts from banks and institutions. With high interest rates, waning business confidence and subdued macroeconomic environment playing havoc, a record number of 389 companies with loans amounting to Rs 2,05,692 crore had approached the corporate debt restructuring (CDR) cell of the banks and financial institutions (FIs) during the fiscal ended March 2012, which is a 45.71 per cent jump from Rs 1,41,158 crore in the same period of last fiscal.

The CDR cell of banks and FIs are yet to finalise the debt recast requests of 47 companies involving an amount of Rs 35,878 crore. “We had rejected the recast requests of 56 companies involving an amount of Rs 19,589 crore. Normally we reject the requests of companies which are beyond recovery or where fund diversion or fraud is suspected,” a senior official of the CDR cell of banks told The Indian Express

. As of now, the cell has approved the recast requests of 286 firms for loans of Rs 1,50,225 crore (Rs 1,10,914 crore last year). Normally, banks and FIs refer a company to the CDR when the borrower finds it difficult to repay the principal and interest within the stipulated period of 90 days and the borrower has a genuine difficulty in making the repayment.

“Of late we are seeing a rise in companies coming to the lenders’ ICU from sectors liked power, steel, sugar, textiles and infrastructure. This is worrisome,” the official in the CDR cell said. Steel and infrastructure together accounted for nearly 38 per cent of the cases — involving Rs 55,000 crore — referred to the CDR cell. There are nine telecom borrowers with an overdue amount of Rs 9,199 crore.

The CDR cell received some high profile CDR requests from India Inc recently. HCC owned by Ajit Gulabchand is now in the CDR cell with loans involving Rs 8,300 crore. Bharati Shipyard has also come to loan restructuring with a loan of over Rs 5,600 crore. Hotel Leela has sought loan recast for over Rs 3,000 crore loan. The biggest loan recast this year is from the GTL Group for over Rs 17,000 crore. The only aviation account that has come for recast is Deccan 360 with a loan of around Rs 500 crore. “Kingfisher has not come to the CDR approval table as of now,” he said.

The CDR scheme covers only multiple banking accounts, syndication/consortium accounts, where all banks and institutions together have an outstanding aggregate exposure of Rs10 crore and above. The CDR is approved when 75 per cent creditors by value and 60 per cent by number approves the recast request. Their decision will be binding on the remaining 25 per cent by value and 40 per cent by number. Once approved, the borrower can get sops like cut in interest rates and extension in repayment period.