India Cem Debt Restructuring Gets Clearance From CDR Cell

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Chennai, May 7: : It was welcome news for a company which was driven to the extent of curtailing despatches on account of working capital constraints. Southern cement major India Cements Ltd’s (ICL) corporate debt restructuring (CDR) programme, effective from January 1, 2003, has got the necessary approvals from the Corporate Debt Restructuring Cell constituted as per the guidelines set by the Reserve Bank of India (RBI).

This development is expected to considerably ease ICL’s working but the success of the programme would however hinge on the ability of the company and its lenders to identify buyers for its assets such as Visaka Cements and other non-core businesses such as sugar.

The CDR package involves restructuring of its operations lock, stock and barrel. Among other things, ICL will have to introduce Voluntary Retirement Scheme (VRS), sell assets, restructure debt including working capital facilities.

Regarding debt restructuring, the proposal provides for various exit options for secured and unsecured lenders with different yield and maturity. The package will be subject to annual review based on which it may be modified. IDBI is appointed as the Monitoring Agency to oversee the implementation.

Chips started going down for ICL over the past few years following the build up of excess capacity in the region which has sent the cement prices on a tail spin landing the company deep in red.

As it can be recalled, ICL had resorted to certain ‘high cost’ acquisitions - the benefits of which did not go the expected way in view of sharp excess capacity situation.