A day before the regulatory forbearance on restructured assets ends, lenders to Kolkata-based Concast Group led by State Bank of India have agreed to a R7,500-crore debt recast package via the corporate debt restructuring cell, sources told FE.

“The CDR cell got an official mandate from 26 banks and cleared the proposal on March 30,” said a banker in the consortium. Lenders said the company also sought an additional fund of R1,700 crore over and above the existing recast package of R5,790 crore. The company will get a moratorium of two years and will have to repay lenders at 10.75% against 14-15% earlier. It will get a total of 10 years to repay loan including the moratorium period.

Between April 2014 and February 2015, the CDR cell okayed R51,250-crore recasts. That compares favourably with R1.01 lakh crore restructured in FY14 and R78,000 crore in FY13, but bankers say many mid-sized and small companies are in trouble.

so-far

“Owing to falling international steel prices, Concast could not make enough profit to service its debt. A joint lenders’ forum (JLF) was convened and the case was referred to the CDR cell in January,” said a lender part of the consortium.

Since April 2014, any restructured asset must be classified as a non-performing asset, following revised guidelines issued by the Reserve Bank of India (RBI). This would require banks to set aside a larger amount by way of provisions of 15% of the value of the asset; currently, the provisioing is 5% since the asset is categorised as a standard restructured asset.

Corporate debt restructuring is a mechanism that requires an approval by a super-majority of 75% creditors (by value) which makes it binding on the remaining 25% to agree to the majority decision and covers only multiple banking accounts and consortium accounts with exposure of R10 crore and above.

The group has presence in diverse sectors like steel products, cement production and real estate, and includes Corporate Ispat, Dankuni Steel, Concast Bengal Industries, Concast Exim, Concast Global, Concast Vyapaar, Surekha Exports and Concast Steel and Power. It is led by Sanjay Sureka as its chairman and managing director.

Concast Ispat, the group’s flagship company has its manufacturing facility in Sodepur, West Bengal and is a producer of TMT bars and wire rods. It also produces finished steel products for the real estate and industrial sectors. The company had reported a profit of Rs 10.6 crore in FY13 on the back of Rs 1,138 crore of revenues in the same period.