In one more case of stressed corporates asking banks for easier loan repayment terms, the corporate debt restructuring (CDR) cell has approved a R2,530-crore debt recast proposal for Shriram EPC. The Chennai-based engineering firm reported a loss of R439.3 crore in the nine months to March on revenues of R495 crore. The company has also sought additional funding from the banks, sources told FE.
Gross debt slightly fell to R1,749 crore as at the end of March 2014 from R1,816 crore a year earlier while net debt stood at R1,707 crore in FY14, Bloomberg data showed.
The ratio of its operating profit to interest expenses, which represents a company’s ability to service its debt, stood at 1:8 in Q1FY15. Interest expenses were at R65.1 crore in Q1, whereas operating profit stood at R8.2 crore. In the June quarter, Shriram EPC reported a net loss of R55.7 crore and R138.7 crore of revenues.
According to the company’s website, Shriram EPC
is part of the $9-billion Shriram Group.
Bankers said the firm’s contribution to the restructuring package would be R160 crore as promoters’ equity; banks have been assured by the company that it hopes to obtain its receivables in the next 2-3 years. As of June 30, 2014, the promoters’ stake in the company was 41.33% with the public shareholding at 58.67%.
The company has been paying its 21 lenders, led by Oriental Bank of Commerce, at the rate of 13-14% but now would be charged only 11.25%. There would also be a two-year moratorium on interest payments.
Bankers added that 18 lenders were part of the CDR restructuring. Sources also anticipate that DBS bank is likely to join the CDR group of bankers soon. Under the package offered, Shriram EPC would get 10 years to repay the loan and has been provided a 2-year interest moratorium by banks.
The company is managed by chairman SR Ramakrishnan and is promoted by Shriram Industrial Holdings. In October 2013, EPC’s board had approved raising R300 crore by issuing cumulative redeemable preference shares in one or more tranches.
The recast was referred to the CDR cell in Q1FY15; the April-June period saw two referrals worth R2,720 crore. The CDR cell, a forum of bankers that takes a call on individual debt recast packages, has, however, seen fewer referrals after the RBI introduced the norms for joint lenders’ forums.
The company’s scrip was down almost 3% and closed at R28.50 on the BSE. It