In what could signal the revival of loan recasts through the corporate debt restructuring (CDR) cell, lenders to Gangakhed Sugar & Energy have referred its loans worth R350 crore to the cell in January, sources told FE, adding that this was the first case in almost two years.

According to sources, the consortium of lenders is led by UCO Bank. “Lenders had last referred a loan in March 2015, following which restructuring rules changed and banks stayed away from the CDR cell,” a source said.

The company is owned by sugar baron Ratnakar Gutte and its licence was reportedly revoked on October 21, 2016, and according to media reports, the excise department had accused it of “illegally supplying ethanol or rectified spirit for manufacture of illicit liquor”.

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However, it was recently reported that Maharashtra government has revoked the action.

Bankers said the case will soon be taken up at the empowered group meeting which will look into the proposal. The Reserve Bank of India (RBI) had allowed lenders to classify restructured accounts under the restructured-standard category till March 2015. However, from April 2015, banks have been instructed to classify restructured accounts as NPAs, and given the continued financial strain across corporate India, chances are that NPA portfolios of some lenders could grow bigger.

In FY15, the cell had approved 54 cases worth R72,560 crore for recast. Since inception, the cell has approved loans worth R4 lakh crore, and 98 companies with loans of R70,851 crore have successfully exited CDR.

Lenders approach the CDR cell to provide some relief to companies under stress by means of reducing the rate of interest being paid and also offering a two-year moratorium on interest payments.

Meanwhile, failure of eight companies in corporate debt restructuring in December has taken the aggregate failure to R1,25,093 crore since the CDR cell was set up in 2001.

The eight companies whose restructuring failed in December include Rohit Ferro Tech (R1,800 crore), Ankit Metal & Power (R990 crore), Action Ispat & Power (R760 crore), Gangotri Enterprises (R590 crore) and Abhijeet Ferrotech (R670 crore).

Restructuring schemes also often turn futile because promoters are unable to sell non-core assets to mobilise resources as promised.

While the moratorium is generally maintained at two years, lenders need to estimate when the company is able to start servicing its debt.