Lenders to Dighi Port have rejected a proposal to merge the company with the parent, Balaji Infra Projects.
Lenders to Dighi Port have rejected a proposal to merge the company with the parent, Balaji Infra Projects, senior bankers told FE. The company, which owes banks close to R5,000 crore, is developing a port on the banks of Rajpuri creek in Raigad district of Maharashtra. The project has been struggling for some time and the debt turned non-performing over a year ago.
Armed with a consent order from the Delhi High Court, Dighi Port approached the joint lenders forum (JLF) to approve a merger with its parent by November 10. However, lenders pointed out the company had failed to service its debt for over an year now. “The window given to us was too small and hence, it was rejected,” a senior banker, present at the JLF meeting held last Thursday, said. He added that the company’s proposal didn’t even provide a rationale for the merger.
Emails sent to the company for a response remained unanswered.
According to the company’s website, when fully developed, the port will have a capacity of 30 million tonnes per annum (MTPA) and one of the deepest channels in Maharashtra. As per the latest available financials, the company had incurred a loss of R57.5 crore on revenues of R13.2 crore in FY14 and had a total debt of R1,481 crore on its books.
Rating agency Care Ratings, had, earlier in January, downgraded Dighi Port’s long term bank facilities to D from B+, due to its inability to service its debt. “CARE has revised the rating assigned to the bank facilities of Dighi Port Limited (DPL) to ‘CARE D’ from ‘CARE B+’ due to ongoing delays in debt servicing attributed to underutilisation of commissioned berths and unavailability of rail and road connectivity,” the rating agency had noted. According to the agency, it assigns D to instruments to those that are “in default or are expected to be in default soon”.
Dighi Port is a special purpose vehicle with a mandate to develop, design, finance, construct, operate and maintain the port on Build, Own, Operate, Share and Transfer basis for a period of 50 years as per a concession agreement with Maharashtra Maritime Board.