The loss-making Jyoti Structures told a bench of the National Company Law Tribunal (NCLT) on Thursday 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 company’s counsel requested the judge to ensure that the interim resolution professional (IRP) study the investment proposals so that the deal does not fall through. The NCLT on Thursday initiated insolvency proceedings against Jyoti Structures — the first of the 12 accounts that Reserve Bank of India (RBI) has asked banks to refer to the bankruptcy court — and listed the case for Monday, July 3, for further orders.
The counsel for State Bank of India (SBI), the lead bank for the consortium of lenders, 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 had been recalled, he added. The counsel said Jyoti Structures owed SBI Rs 1,745.39 crore. The judge asked SBI’s lawyers to submit a brief summary of the loan agreement along with some information on the total dues of to lenders.
Jyoti Structures reported a net loss of Rs 1,483 crore in 2016-17 on the back of Rs 857 crore in revenues. In Q4FY17, the company 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 26.90 apiece but since the debt was not converted into equity within 210 days, the strategic debt restructuring failed.
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 RBI had on June 13 had asked banks to refer a dozen troubled companies — with a combined debt of close to Rs 2.4 lakh crore — to the NCLT.
Bankers were given a fortnight from the notification to move the tribunal. Among the other companies that have been refereed to the NCLT are Essar Steel, Bhushan Steel, Electrosteel Steels, Jyoti Structures, Lanco Infratech, Monnet Ispat and JP Infratech. The 12 accounts identified by the central bank are those to which banks have an exposure of more than Rs 5,000 crore, more than 60% of which has been recognised as NPAs. Once these cases are 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. In its FY16 annual report, it had said that 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.