Close to Rs 37,050 crore of loans have been approved for a debt recast by the corporate debt restructuring (CDR) cell in the six months to September 2014, indicating that the stress in corporate India continues unabated. While the amount restructured in the first half of FY15 is smaller than the Rs 58,158 crore seen between October to March 2014, it is nevertheless fairly high.
What?s worrying is that most of the requests for loan recasts are coming in from smaller companies. According to data compiled by the CDR cell, 16 accounts were referred to it in the six months to September amounting to R16,020 crore.
PK Malhotra, deputy managing director (stressed assets management) at State Bank of India (SBI), told FE that a year ago it was mainly infrastructure accounts that were being referred to the CDR cell. ?Right now, it is primarily companies from the textile and pharma sectors which are less leveraged that are seeking more lenient repayment terms,? Malhotra said.
UCO Bank chairman Arul Kaul said that the reason more smaller accounts are being recasts is because most large accounts have already been restructured. A senior banker at Bank of India observed that with the joint lenders? forums (JLFs) now a regular feature, not every stressed case was going to the cell.
?Moreover, since the window for restructured accounts to be labelled standard and not an NPA ends on March 31 next year, banks are going slow on recasts,? said a senior banker at Bank of India.
Accounts that were admitted to the cell between April and September include Shriram EPC, whose debt of R2,400 crore has been recast. Bankers point out that there are not too many large cases as there were last year such as Lanco Infra where R7,300 crore was restructured and Electrosteel’s R6,400-crore recast. One reason for this, bankers believe, is that any trouble spotted in a large account is being attended to quickly at a JLF well before it becomes an NPA.
In September, the largest account referred by bankers for recast was R1,630 crore from JKC Projects, followed by Surana Corporation with a debt of R1,130 crore. On the approval front, September saw 12 cases worth R12,200 crore being cleared with ACL Textile R1,240-crore loan leading the pack, followed by Base Corporation’s R1,030 crore.
In July, bankers had referred loans of companies like Soma Isolux NH1 Tollway (R2,070 crore), Base Corporation (R1,030 crore) and Ankit Metal and Power (R900 crore) for a restructuring. ?With most of the larger cases having been dealt with, smaller exposures that are stressed are in focus,? said Nirmal Gangwal, managing director at Brescon Corporate Advisors.