Bankers are likely to clear Electrosteel Steels’ R 8,000-crore debt recast when the corporate debt restructuring (CDR) cell meets this month. The Kolkata-based pipe manufacturer was referred to the cell in June.
?All banks in the consortium have received the final package details and we are looking at closing it in the next meeting,? said a senior official at a public sector bank.
According to other bankers in the consortium, the company had requested banks to give additional capital worth R1,100 crore for completing incomplete projects. Lenders, on the other hand, have demanded that Electrosteel Steels’ promoters bring in equity worth R220 crore as part of the restructuring process.The average interest rate, which currently stands at 13-14%, will reduce to 11-12% post restructuring.
The 27-bank consortium is being led by State Bank of India (SBI), which has an exposure of close to R1,400 crore to the company.
Punjab National Bank has lent R400 crore to the company, Indian Overseas Bank’s exposure stands at R350 crore, while Oriental Bank of Commerce and UCO Bank have an exposure of R300 crore each. Non-bank lender Srei Infrastructure has an exposure of R350 crore.
The Umesh Kejriwal-promoted Electrosteel Steels reported a net income worth R133 crore for the quarter ended June 30. The company reported net loss close to R71 crore for the first quarter.
In FY13 alone, the cell approved restructuring for 106 accounts worth R76,479 crore.
The pace for restructuring does not seem to be slowing down this year either. In the April-June period this year, the cell had approved loans worth R21,266 crore for restructuring. According to estimates given by eight large banks, over R25,000 crore worth of cases will come up for restructuring by September 30. Bankers meet every month to take stock of the development in each company admitted to CDR cell and whether they should be approved or not.
According to analysts, the banking system could take a collective hit of an estimated R13,000-15,000 crore on bottomline in next two years due to tough restructuring guidelines issued by Reserve Bank of India (RBI).
In the guidelines announced in May, RBI raised the provisioning requirement for all new restructured loans to 5% starting June.