In a last-ditch effort to save the company, Jain Irrigation is going to submit a revised proposal to lenders by next week for debt restructuring, sources close to development told FE. Jain Irrigation was undergoing a debt-restructuring process after banks signed an inter-creditor agreement (ICA) to resolve the company, as per a June 7 circular of the Reserve Bank of India.
The company is going to submit a proposal to restructure Rs 4,000 crore of debt, in which the loan is likely to be split into sustainable and unsustainable portions, the source said. The company plans to pay the entire Rs 4,000 crore over a time period, the source further added. The leader of the banks’ consortium, State Bank of India (SBI), is likely to convene a meeting of lenders by the end of April to take a call on the resolution plan.
Global ratings firm S&P had earlier downgraded Jain Irrigation Systems to ‘D’ (default grade) on missing interest payment due on February 1, 2020, on securities issued by its subsidiary. 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.
Lenders were hopeful to resolve Jain Irrigation by the March quarter; however, they fear that the ongoing situation due to Covid-19 may impact the resolution of Jain irrigation. “We may consider to refer Jain Irrigation to the National Law Company Tribunal (NCLT), if it does not get resolved in the June quarter,” a senior banker told FE. Many lenders have already made provisioning of 15% in the December quarter as Jain Irrigation slipped to become a non-performing asset (NPA). Similar provisioning needed to be done in the March quarter by the banks, as the account is still unresolved.
Jain Irrigation is involved in the manufacture of plastics-based micro-irrigation piping and plumbing systems. The company also has a growing food processing business, which mainly produces fruit pulp, dehydrated onions and spices. Jain irrigation posted a consolidated net loss of `2,838 crore during the quarter ended December 31, 2019.