Total value of corporates who have been referred to corporate debt restructuring (CDR) by the banks has shot up three times in 2009-10 over the last fiscal.
During 2009-10, 31 cases worth Rs 20,184 crore were referred to the cell while in 2008-09, 34 cases valued at Rs 7,118 crore were sent to CDR by banks like State Bank of India, Punjab National Bank(PNB), ICICI Bank and Bank of Baroda (BoB).
In 2009-10, CDR-approved sick corporates has been valued at Rs 17,763 crore and only nine cases were yet to be implemented. Some of the companies that have been approved and implemented by CDR include Shakti Sugar, Ginni Filament and Alps Industries. In 2008-09, 29 cases worth Rs 4,009 crore were approved by the CDR cell.
As many as eight cases, valued at Rs 2,564 crore, have been referred to the cell during the first quarter of the current financial year. The cases are mainly related to industries like textiles, retail, agri technology, steel and bio-fuel industries.
Talking to FE, V Ravindranath, chairman of the empowered group of CDR, said many of the industries like auto component and steel are showing signs of recovery following the restructuring. However, industries such as textile and sugar are still under stress, he said.
Majority of cases are in the size of Rs 50-500 crore and average size of the debt restructuring under CDR is estimated at Rs 485 crore.
While restructuring, 108 cases with a debts exposure of Rs 60,517 crore have been implemented so far, 12 cases have been partly implemented, comprising Rs 5,153 crore of debts. Mytas Infra, with debt amount of Rs 2,842 crore, and Vishal Retail, with debt amount of Rs 470.32 crore, are the two cases that have been cleared by the cell in the recent past.
The CDR mechanism is a voluntary system based on debtor-creditor agreement (DCA) and inter-creditor agreement (ICA). It functions in accordance with the guidelines issued by the RBI and the policies evolved and approved by CDR core group from time to time.
Led by IDBI CMD, the core group of CDR comprises heads of State Bank of India, Punjab National Bank, ICICI Bank, Bank of Baroda, Bank of India and Indian Banks’ Association. Currently, there are 58 members of CDR.
As of now, 20 CDR members have referred 215 cases approved so far since the cell became operational in 2002. Of these, IDBI, IFCI, ICICI and SBI have together referred 148 cases, which means 69% in terms of numbers and 81% in terms of value.
Reducing rate of interest, extension of repayment period, conversion of parts of loan into equity and debt waiver and additional finance are certain things that are looked into when a particular case is referred to CDR.