For Hyderabad-based IVRCL, promoted by the Reddy family, the collapse on Thursday of a flyover it was building in Kolkata is perhaps the greatest blow in its efforts to recover from serious financial woes.

The construction company, which is helmed by Chairman and Managing Director E Sudhir Reddy, registered more than 12 quarters of losses due to mounting debts, payment obligations and project delays.

It closed the last financial year with a turnover of ₹3,117 crore and a loss of ₹672 crore. In the third quarter ended December 31, 2015, it registered a turnover of ₹448 crore and a loss of ₹304 crore. IVRCL’s troubles started about three years ago when the infrastructure business slowed down.

Last year, the company was forced to take up strategic debt restructuring because debts spiralled quarter after quarter and revenues dwindled due to poor execution of contracts — both due to delays in securing clearances and because of the working capital crunch.

The Joint Lenders Forum headed by SBI invoked the provisions of a Strategic Debt Restructuring programme in November 2015.

Under RBI norms, when such a move is initiated, the banks join the Board and decide how to put the business back on track. It provides for 18 months to recoup.

During this period, loans to the company are declared as a non-performing asset.

The lenders convert the loans into equity, which has now gone up to 51 per cent. The IVRCL promoters’ holding had slipped to 7.69 per cent as of December 31, 2015.

Debt revamp When the debt revamp package was approved, the lenders had given clearance for a package of ₹7,350 crore and non-fund based credit of ₹2,000 crore to facilitate the working capital required to execute ongoing works.

The company tried to divest some of its matured assets, and managed to sell some, including a desalination plant in Chennai. A deal for three road projects in Tamil Nadu was inked with TRIL, a Tata group entity, when the market was at a low point.

By divesting more projects, the company could have slashed its debt and also partially free up equity to fund new projects.