The National Company Law Tribunal (NCLT) on Tuesday admitted the insolvency case against Jyoti Structures — the first among the 12 accounts that the RBI has asked banks to refer to the bankruptcy court. Meanwhile, lenders have appointed Vandana Garg, partner at BDO India, as the interim resolution professional (IRP) for the company. A two-judge bench of the NCLT said after examining the documents it was satisfied that there was a default by the company and since Jyoti Structures has not objected to the insolvency proceedings, the petition was admitted. Jyoti Structures reiterated that it had no objection to the insolvency proceedings but requested the tribunal to be cognisant that it was in talks with a potential buyer for a stake sale. The bench said promoters are not prohibited from placing information of prospective buyers with the IRP who will, in turn, submit it to the committee of creditors (CoC).
The counsel for State Bank of India (SBI), the lead bank for the consortium of lenders, had told a two-judge bench it had sent a notice to Jyoti Structures on May 17 asking it to repay the dues within 15 days. Since the bank had received no money from the company till May 31, the loan was recalled.
The counsel said Jyoti Structures owed SBI Rs 1,600.74 crore as on June 20. The company reported a net loss of Rs 1,483 crore in 2016-17 on the back of Rs 857 crore in revenues. In Q4FY17, it reported a net loss of Rs 730 crore and its total debt, excluding the non-fund based components, stood at Rs 4,888 crore.
Lenders to loss-making Jyoti Structures had decided to convert loans into shares at a value of Rs 26.9 apiece but since the debt was not converted into equity within 210 days, the SDR failed. In its FY16 annual report, it had said the restructuring package as envisaged by the JLF could not be successfully implemented and the company continued to be under financial stress as most of the banks did not release the enhanced working capital facilities.
Its debt was restructured by a joint lenders’ forum (JLF) in September 2014. The company is promoted by KR Thakur (3.34%), Prakash K Thakur (4.51%) and Surya India Fingrowth (5.35%). Other major shareholders include UTI Infrastructure (2.97%) and HDFC Trustee Company (4.71%), Yes Bank (1.7%) and LIC Market Plus 1 Growth Fund (1.07%).
The 12 accounts have an exposure of more than Rs 5,000 crore, over 60% of which has been recognised as NPAs. Once the case is with the NCLT, the lenders need to set up a committee of creditors that will come up with a plan on how the asset will be tackled. If the committee is unable to find a solution within 180 days — this can be extended to 270 days — the borrowing entity will go into liquidation.