Enterprise service provider Tulip Telecom, EPC player Indu Projects, Vibha Agrotech and engineering firm Apex Encon Projects...
Enterprise service provider Tulip Telecom, EPC player Indu Projects, Vibha Agrotech and engineering firm Apex Encon Projects are among companies whose debt recast packages have failed. Between the four, banks had restructured a total of R5,300 crore.
Promoters of Indu Projects, with interests in power, mining, infrastructure and real estate, were unable to bring in the required promoters’ contribution. Banks had recast an amount of R2,300 crore for the firm, one of the bigger failures. “The package failed before it could take off because the promoter did not bring in his contribution as per the CDR rules,” a senior banker said. Promoters of Apex Encon too failed to bring in their equity contribution. For Apex Encon, banks had recast around R500 crore of loans while for Vibha Agrotech, established in 1995, loans worth Rs 700 crore were restructured.
The value of unsuccessful CDR exits at Rs 27,000 crore in FY15 compares poorly with the amount of Rs 14,000 crore in FY14, and while FY15 saw 46 failures, FY14 saw 50 unsuccessful recasts.
Lenders such as Australia and New Zealand Banking Group and Deutsche Trustee have filed winding-up petitions against Tulip in the Delhi High Court. The BSE-listed firm, for which bankers had recast Rs 1,600 crore, posted revenues in Q3FY13 of Rs 253 crore, a fall of 171% year-on-year, and a net loss of Rs 154 crore. That was the last quarter for which the firm declared its financial results. In Q3FY12, it had reported a profit of Rs 785 crore.
Among the reasons listed for the failure of Tulip’s CDR recast are its inability to pay dues, non-achievement of year 1 CDR projections, delay in sale of assets, the account turning non-performing with lenders and the recovery plan being unviable. ICICI Bank is the lead banker of the 13-member consortium. The company failed to redeem its approximately $140 million of FCCBs in mid-2012. BSE suspended trading of the stock on March 23.
Indu Projects’ gross turnover fell almost 30% to Rs 826 crore in FY14 while the net loss widened to Rs 355 crore from Rs 292 crore in FY13. The company said that it has long-standing receivables including retention money and amounts withheld by the customers, advances to suppliers and subcontractors, capital and other advances and project work-in-progress. The total amount outstanding was Rs 493.62 crore it said, adding that “the realisation of the same is delayed on account of the overall slowdown in the economy and consequent slow down in the infrastructure sector”.
In September 2014, bankers told the company they wanted to exit the CDR. At the time, the company was “in discussion with the lenders individually to renegotiate the arrangement and also evaluate alternative sources of funding”, a senior banker said. Indu Projects said that there was stress on the internal cash flows and there was a delay in payment of certain statutory dues. “The slowdown in the infrastructure sector in the country, Central Bureau of Investigation (CBI) cases and cash flow issues faced by the company during the year resulted in a cash loss,” the firm’s annual report said. It added that there was a delay in repayment of interest and principal loans to the lenders on account cash crunch.