Lenders to Surana Industries (SIL) will meet the firm’s promoters next week to finalise the conversion of a portion of the borrowings into equity using the Reserve Bank of India’s (RBI) strategic debt restructuring (SDR) scheme, bankers aware of the development told FE.
The company owed lenders Rs 2,762 crore in FY14, up 22% over the previous year, Bloomberg data shows. Once an SDR is inked, lenders have 18 months to sell the asset, after which it will turn into a bad loan.
A senior public sector bank (PSB) official, part of the joint lenders’ forum (JLF), confirmed that a consortium of 14 bankers led by IDBI Bank is keen on an SDR. “We are trying to get majority of banks to approve the SDR scheme,” he added.
A JLF needs approval of 60% of the lenders by number and 75% by value to decide on a corrective action plan (CAP).
In Q2 FY16, the company reported a net loss of Rs 131 crore on the back of Rs 178 crore in revenues. In FY15, its net loss after finance costs of Rs 136 crore stood at Rs 263 crore on revenues of Rs 642 crore. Among the lenders to the company are Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank, State Bank of India (SBI), Syndicate Bank and IDBI Bank.
Headed by Babu Srinivasan as its chairman and Dineshchand Surana as its managing director, Surana Industries is promoted by GR Surana, Shantilal Surana, Dineshchand Surana and Vijayraj Surana who own 11.40% each of the company.
“The company is facing stress in repaying loans under CDR,” he added. In its FY15 annual report, the company said it has faced labour unrest at the plant for the majority of the financial year and production had been adversely affected, post implementation of the CDR package. Its CDR package of Rs 1,331 crore was approved by banks in 2014.
An SDR allows banks to convert debt at a price below the current market value and can now own 51% or more of the equity of the company.
So far bankers have decided to implement the SDR scheme for Electrosteel Steels, Jyoti Structures, Lanco Teesta Hydro Power,Monnet Ispat, IVRCL, Coastal Projects, Gammon India and Ankit Metal and Power.
Shares of the company on BSE closed at Rs 9, up 20% from its previous close.
Surana Power (SPL), Surana Mines and Minerals and Surana Green Power are three wholly-owned subsidiaries of the company. Surana Power is in the process of setting up of a 2 x 210 MW thermal power plant at Raichur.
The company’s FY15 annual report stated that although the original project cost was estimated at Rs 2,400 crore in 2010, it has been revised to Rs 3,090 crore.
Operations of SPL’s 35 MW thermal power plant were adversely affected, it said, due to fall in power tariff rates and increase in input costs.
“Consequently, the debt under sole banking with UCO Bank was restructured,” it noted.