By Ankur Mishra
Jain Irrigation has submitted a proposal to lenders asking they restructure Rs 4,000 crore of loans, sources close to development told FE. The rejigging of debt is expected to be such that the company is allowed to repay the loans over a longer period. The plan has been shared with the rating agencies and State Bank of India (SBI) is likely to convene a meeting of lenders soon once the feedback from the agencies is in.
Lenders, who had earlier signed an Inter Creditor Agreement (ICA), are looking to come up with an out-of-court resolution plan for Jain Irrigation since initiating insolvency proceedings under the IBC is not an option. On Wednesday, the Cabinet decided to suspend insolvency proceedings under IBC following an announcement made by the finance minister in March. While some lenders had increased provisions, against the exposure, to 15% in the December quarter, when the account slipped to become a non-performing asset (NPA), others are expected to follow suit in the March quarter, in keeping with the income recognition and asset classification (IRAC) norms. S&P has downgraded Jain Irrigation Systems to ‘D’ (default grade) for missing interest payments due on February 1, 2020. S&P also said the resolution plan might take longer than expected and the company’s operations will continue to suffer due to a lack of sufficient liquidity to manage its debt servicing and working capital requirements. In October, 2019, Care ratings had downgraded Jain Irrigation to ‘D’, due to a delay in servicing its debt.