Sources told FE that while nine of the 18 banks, including State Bank of India, Punjab National Bank and United Bank of India are through with the refinancing, nine others are in the process of doing the same.
“The 5/25 refinancing has already been approved by some of the large lenders like PNB and SBI and some of the smaller members of the consortium should be through with it in the next few days. It should ease JITPL’s cash flow related problems to a large extent, particularly since even the first of its three 600 MW units hasn’t completed two years of operations yet,” they said.
They also added that the refinancing is being done as per the guidelines issued by Reserve Bank of India under Flexible Structuring of Long Term Project Loans to Infrastructure and Core Industries, popularly known as the 5/25 scheme.
Introduced by RBI in 2014, the restructuring plan allows banks to extend the tenor of a loan to infrastructure projects, thereby reducing the repayment burden on companies.
The plan was introduced as RBI felt that a fear of asset liability mismatch is stopping banks from providing long tenor financing to infrastructure projects, thereby putting pressure on their cash flows and in some cases, making them unviable.
The debt overhang of JITPL can be gauged from the fact that as of FY15, its holding company – Jindal India Powertech – has pledged 51% stake in it for a term loan, over Rs 5,086 crore of which is due over the next 10 years. As per the Annual Report of JITPL’s ultimate holding company Jindal Photo, the company had made a net loss of Rs 23.8 crore in FY15.