The consortium of 27 banks has deferred plans to recast Rs 7,000-crore loan extended to the troubled Electrosteel Steels due to differences over terms of the proposal, including fresh capital infusion and corporate guarantee that promoters are supposed to bring to the table.
“The Electrosteel proposal did not come up for discussion at the last CDR (corporate debt restructuring) cell meeting held on Friday,” a senior banker told PTI.
He also said that no fresh date has been fixed for taking up the proposal.
With over Rs 1,000-crore exposure to the troubled Kolkata-based company, State Bank of India is the leader of the consortium.
Last month, an SBI official had told PTI the CDR proposal would be cleared by the end of this month, provided promoters met their demands, which include corporate guarantee.
“Hopefully, the proposal will go to the CDR cell in July and the process will be completed by September-end,” the official had said.
Electrosteel could not be reached for comments.
Other lenders of the troubled ductile iron (DI) pipes and casting manufacturer, promoted by the Kejriwal family, include Punjab National Bank with around Rs 400 crore exposure, Srei Infra about Rs 440 crore, Indian Overseas Bank (around Rs 350 crore), and Oriental Bank of Commerce and UCO Bank have given over Rs 300 crore each to the company.
The group flagship Electrosteel Castings is the holding company of Electrosteel Steels with 39 per cent stake, and bankers want guarantees from this firm for CDR to go through.
According to another banker, the promoters were not keen on providing corporate guarantees but are ready to offer personal guarantees. Bankers also say that for the CDR to be completed, the company must infuse around Rs 300 crore of fresh capital.
Some of the lenders already have corporate guarantees from the flagship firm in which Kejriwals own 48 per cent.
Last fiscal, the company had doubled its loss to Rs 280 crore from Rs 141 crore a year ago.
The first quarter of the fiscal saw the banks recasting Rs 33,000 crore, up from Rs 20,000 crore in the year-ago period. Last fiscal, as much as Rs 91,000 crore loans were restructured.
The CDR cell was formed in 2001 as both the Reserve Bank and the government felt the need for such a body to resolve cases of corporate financial sickness.
Banks refer an account to the CDR cell to ensure that the loan is recovered properly from the borrower even as he revives the business.
As per the new tightened CDR norms, the promoters seeking to recast their loans should bring in 25 per cent of the loan amount as fresh capital infusion.