The Reserve Bank of India (RBI) has asked lenders to GTL to conduct a forensic audit of the company’s accounts before approving a one-time-settlement (OTS) scheme, two bankers confirmed to FE. They added the process had been initiated, reports Shayan Ghosh in Mumbai. Bankers have been exploring the option of negotiating a one-time settlement for the dues of the Manoj Tirodkar-promoted firm which, at the end of March 2015, amounted to Rs 2,650 crore, according to Bloomberg data.
In April, GTL had said in a statement that over the past five years it had paid more than Rs 1,400 crore to banks from its internal resourceswithout any fresh borrowings. “GTL Limited continues to engage with its lenders in identifying opportunities to monetise its businesses and non-core assets in its goal to further reduce/repay debt which cumulatively will mean a payment of Rs 4,000 crore to banks,” it had said.
According to two people aware of the RBI instruction, the Central Bureau of Investigation had written to lenders seeking details of the OTS scheme, which banks have already replied to. The agency is also understood to have written to the finance ministry about the company, which in turn sought the intervention of the central bank.
“A CA (chartered account) firm has been appointed and is looking into the books of GTL. The promoters are cooperating with the auditors,” a senior banker said. Lenders to GTL include Bank of Baroda, Punjab National Bank, IDBI Bank and Bank of India, among others. While a couple of lenders have approved the settlement, the rest are yet to take a decision.
In response to a query, GTL said on Wednesday that any “purported” instructions to banks to conduct forensic audits on viable borrowers is only a step in the correct direction. “Any such audit can only be seen as a means to ensure that suitable and eligible borrowers such as ourselves access the above mentioned restructuring programs and instances of malfeasance are appropriately eliminated,” the company said.
According to GTL, to the best of its knowledge, RBI has issued instructions to banks to conduct audits in all cases of borrowers having an exposure over Rs 500 crore and where there is a proposal to settle the dues of the banks and apparently, such audits are currently being undertaken for over 97 companies.
Forensic audits are aimed at evaluating a firm’s financial information in order to probe alleged fraud, embezzlement or other financial claims. In April, FE had reported that the company was negotiating an OTS with lenders by which it will repay 60% of the outstanding debt.
The company reported a net loss of Rs 2,933 crore on the back of Rs 1,707 crore in revenues in FY16. As of March 2016, Global Holding Corporation owned 32.41% of the company, followed by Manoj Tirodkar at 11.82% while 21 banks collectively own 24.61%.
According to a Bloomberg report dated January 25, 2103, “GTL Infrastructure amassed 108 billion rupees in debt by end of March, partly a result of its 80.3 billion rupees acquisition of mobile phone transmission towers in 2010, according to company filings. GTL’s debt stood at 43.3 billion rupees at the end of March, its filings show.”
Standard Chartered Bank, Mauritius, one of the unsecured creditors to GTL, had filed a legal case against the company seeking pari passu status in terms of sharing of security and cash flow with other lenders under a corporate debt restructuring (CDR). However, as per the CDR terms, CDR lenders cannot offer preferential treatment to certain lenders ahead of other lenders.
In its FY16 annual report, the company said that three sets of lenders — CDR, ECB and NCD holder — considered the OTS proposal in various meetings and as a culmination of such discussions, all the above lenders have agreed in-principle to consider the OTS proposal and the sharing ratio as decided by the lenders.
GTL, part the Global Group, provides network services to telecom operators, OEMs and tower companies. The company’s CDR package was approved by lenders in December 2011.