Bajaj Hindusthan Sugar on Friday said that lenders have decided to initiate the scheme for sustainable structuring of stressed assets (S4A) of the Reserve Bank of India (RBI). It added that the proposal for sale of its co-generation power business, initiated earlier, has consequently been shelved. In the quarter ending March, 2017, Bajaj Hindusthan reported a net profit of Rs259 crore on the back of revenues of Rs1,652 crore. In FY17, the company reported a net profit of R7.4 crore on revenues of Rs4,619 crore. Its total debt stood at Rs5,703 crore in FY17. In a statement to the stock exchanges, the company said “the Joint Lenders’ Forum (JLF) of the Company at its meeting held on June 23, 2017 (reference date) has taken a decision that the Loan account of the Company will be taken up for consideration under the ‘Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme)”.
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The company added that bankers shall evaluate and formulate the resolution plan as envisaged in the scheme for implementation. Lenders to the Uttar Pradesh-based company include State Bank of India (SBI), Bank of Baroda (BoB), Allahabad Bank, Central Bank of India, IDBI Bank, Punjab National Bank (PNB), among others. The company is promoted by Bajaj family who collectively own 2.62%, Bajaj Resources (7.23%), Global World Power Project (3.63%), Bajaj International Realty (2.45%), among others.
It is a more lenient scheme towards lenders because the sustainable debt needs to be not less than 50% of the total debt implying a haircut of 50% or less. The scheme, however, does not permit changes in either the moratorium or the payment terms for either the principal or the interest. Banks are permitted to covert the ‘unsustainable’ part of the debt into equity or redeemable cumulative optionally convertible preference shares (CRPS).