The corporate debt restructuring (CDR) cell may end up restructuring nearly Rs 1 lakh crore worth of loans in FY14 alone, according to a senior banker. In March alone, the cell has approved debt recast for 18 cases, adding up to Rs 30,000 crore worth of debt, said RK Bansal, chairman of the cell.
So far, over Rs 98,000 crore worth of loans have been approved by the cell in FY14 and more are waiting to be added before the financial year ends, another senior banker said.
As on March 31, the outstanding amount of loans restructured by the CDR cell since its inception would have crossed Rs 3 lakh crore. Banks have had a rough time these past two years with hundreds of companies wanting easier repayment terms; in FY14, close to 100 companies approached the CDR cell asking for loans worth R1.25 lakh crore to be recast.
In FY13, nearly 130 firms approached the cell though the amount they wanted re-worked was smaller at R91,500 crore. February saw R4,300 crore of assets being recast across six companies, higher than the R3,500 crore restructured in January.
For a restructuring package to be approved, 75% of the lenders by value and 60% by number have to agree to the proposal.
A consortium of 22 lenders, led by ICICI Bank, has approved the restructuring of ABG Shipyard's Rs 11,000 crore on Thursday, making it the second largest case restructured by banks in FY14 alone. Gammon India's Rs 13,500 crore loan was also recast by bankers in July.
Some of the other large cases restructured during the year included Lanco Infrastructure (Rs 7,500 crore), Electrosteel Steels (Rs 6,461 crore), Soma Enterprises (Rs 6,000 crore) and Abhijeet Group (Rs 6,000 crore).
As part of the restructuring package, ABG Shipyard will get additional funding worth Rs 1,800 crore from its lenders. Of this, R1,200 crore is in the form of non-fund exposure, R300 crore as a term loan and R300 crore in the form cash credit. The firm’s contribution to the restructuring package will be a mere R230 crore as promoters’ equity.
The interest rate has been cut to 11% for the company, as compared with 13.5% earlier, said Dhananjay Datar, chief financial officer, ABG Shipyard. The shipping firm will get a two year moratorium and will have to repay its loans within eight years after. Bankers are likely to sacrifice Rs 985 crore as part of this restructuring exercise.
The company posted a Rs 156-crore loss in the three months to December, compared with a profit of Rs 18.62 crore a year ago. It reported total income of Rs 291.7 crore in the third quarter of FY14, down 40% year-on-year.