1. Asian colour stressed assets: Lenders mull S4A route

Asian colour stressed assets: Lenders mull S4A route

n Have commissioned a techno-economic viability as first step

By: | Mumbai | Published: August 11, 2016 6:48 AM

Led by State Bank of Patiala (SBP), lenders to Asian Colour Coated Ispat (ACCIL) are looking to initiate the scheme for sustainable structuring of stressed assets (S4A), senior bankers told FE. As a first step, they have commissioned a techno-economic viability (TEV); the results would reveal whether it qualifies for a loan recast.

The Gurgaon-based steelmaker — not listed on the stock exchanges — had posted a profit of R246 crore in FY14 (latest available) on the back of R5,427 crore in revenues. Its total debt stood at R3,019 crore in the same period. Other lenders include State Bank of India and its associate banks, Allahabad Bank, Indian Overseas Bank, Canara Bank, Union Bank and Bank of Baroda among others.

“The TEV study is likely to come by August 31 and as and when the forensic audit results come, banks will have to take the decision to their respective boards for approval,” a public sector banker said, adding that only after the TEV establishes sustainable cashflows, lenders will meet to decide the course of action.

An S4A plan requires the current cash flows of a company to be sufficient to service at least half the total loans. A senior public sector bank executive said a loan recast by way of an S4A might be possible since both demand and prices of steel have looked up in the past few months and the imposition of the minimum import price (MIP) has limited imports.

Led by RK Aggarwal as chairman and Pradeep Aggarwal as vice-chairman, the company produces cold rolled coils and sheets, galvanised plain coils and sheets, galvanised corrugated sheets and colour coated coils and sheets. ACCIL has a cold rolling mill complex with an installed capacity of 3,00,000 tonnes per annum.

The S4A scheme has been viewed as an improvement over the Strategic Debt Restructuring (SDR) plan since it allows banks to retain the promoters whereas the SDR envisaged bringing in a new set of promoters. While banks have initiated an SDR for more than a dozen firms, they have been unable to rope in new promoters for even one company.

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.

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