IVRCL approaches CDR cell, seeks Rs 6,600-cr debt recast

Jan 21 2014, 23:48 IST
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SummaryHyderabad-based engineering company IVRCL has approached the corporate debt restructuring cell for a recast of R6,600-crore debt

Hyderabad-based engineering company IVRCL has approached the corporate debt restructuring (CDR) cell for a recast of R6,600-crore debt. In a notification on BSE on Tuesday, the company said it has initiated the CDR process by making a reference to the cell.

A consortium of 18 banks, including State Bank of India, ICICI Bank and IDBI Bank will now take a call on the company's viability and the debt-recast package will be discussed accordingly.

IVRCL's net loss widened to R122.5 crore for the quarter ended September 30 from a loss of R39.6 crore in the previous year. Net income from operations grew 13% year-on-year to R1,124.26 crore in the quarter while total expenses stood at R1,100 crore, up 16% from the previous year.

On Monday, two of the company's directors — Sunil Reddy and Ella Reddy — submitted their resignation. The company now has three full-time directors, E Sudhir Reddy, Balarami Reddy and K Ashok Reddy — and three independent directors TRC Bose, PR Tripathi and V Murahari Reddy. IVRCL share ended at R14.90 on Tuesday, up 1.7% from the previous close on BSE.

The October-December period was one of the busiest months for the CDR cell with loans worth R44,800 crore being referred. Large cases, like that of Gammon India's R13,500-crore loan, were approved while those like ABG Shipyard’s R11,000 crore were discussed. The quantum of requests before the CDR cell has now crossed R1.1 lakh crore so far in FY14 with October seeing restructuring pleas for R22,269 crore.

The CDR cell, however, also saw a moderation in the cases which were finally approved for restructuring, with 11 cases worth only R15,589 crore being approved in the quarter. In the July-September period, cases worth over R22,000 crore were approved, as per data available from the cell.

Engineering procurement and construction (EPC) companies are the second highest contributors to restructured loans, contributing to 18.11% of the live cases approved by the cell. As of now, the highest contributors are iron and steel companies, which constitute 21.3% of the recast loans.

Over the last few quarters, the contribution of EPC companies to total restructured loans has been on an upswing, even as loans of iron and steel companies are coming down. In the quarter ended December 31, 2012, EPC companies consisted of 9.35% of approved restructured loans compared with iron and steel which stood at over 23%.

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