SBI Seeks To Resolve Rs 1 Lakh Crore In Stressed Cases By March

Reliance Power

Reliance Power’s promoters have assured bankers that they will either bring in equity of their own or find an external investor. The outstanding debt of the company stands at Rs 27,000 crore.

Since the company’s power projects are all functional and have power purchase agreements, lenders are confident that investors can be found. According to the first banker quoted above, if the lending consortium is not satisfied with the promoters’ efforts, lenders can take over the search for an investor. Already, the company has managed to restructure over Rs 2,000 crore debt associated with its Samalkot project with U.S. Exim bank, where the interest rate has been lowered and the repayment period has been extended to 2022.

Reliance Infrastructure

At Reliance Infrastructure, debt of individual projects under the company is being resolved. The infrastructure arm of the Reliance Group operates multiple projects in the roads, power and transportation sector through special purpose vehicles.

The company, in September 2019, detailed an asset light strategy. For instance, on Jan. 7, the company said it had received in-principle approvals to conclude the sale of its Delhi-Agra toll road. Similarly, the debt restructuring proposal for the Mumbai Metro project, in which Reliance Infrastructure has 69 percent stake has been cleared.

Reliance Naval

Lenders, led by IDBI Bank Ltd, which have a Rs 9,000-crore exposure to Reliance Naval & Engineering, have been contemplating an insolvency petition against the borrower for some time. However, the consortium did not get requisite majority within the committee of creditors for this. Before the Anil Ambani-owned Reliance Group took over the company, Pipavav Defence and Offshore Engineering Company Ltd. had faced corporate debt restructuring owing to cash flow problems.

While Reliance Infrastructure owns 30 percent stake in the company, lenders are trying to resolve Reliance Naval separately, due to the high debt on the books of the company.

As restructuring attempts have failed, lenders will be left with no option other than insolvency in this case, the bankers quoted above said.

Reliance Home Finance & Reliance Commercial Finance

Discussions around a resolution plan for Reliance Home Finance and Reliance Commercial Finance are continuing. Both non-lenders went into default last year.

A recent forensic audit into the books of Reliance Home Finance found that while there were instances of related parties having financial transactions with the company, the auditor did not find any financial impropriety. Reliance Home Finance, in a stock exchange notification on Jan. 12, said the forensic audit didn’t have any adverse findings.

This allowed the lenders to give the group’s two non-bank lenders more time, and discussions on a resolution plan are ongoing, said the bankers quoted above.

Suzlon Energy

In case of Suzlon Energy, lenders are hoping that a restructuring plan will emerge. While initial talks on bringing in capital into these companies have not been successful, negotiations are continuing. On Jan. 8, Suzlon Energy released a clarification to the stock exchanges, where it said that restructuring talks with lenders for Rs 12,000 crore in loans were continuing “constructively”.

The renewable power company had proposed to split its debt into sustainable and unsustainable portions. The plan also involves a substantial haircut for banks, which the lenders are not keen on, according to the people quoted above.

Soma Enterprise

Lenders to Soma Enterprise, which has a debt of nearly Rs 4,000 crore, have been attempting to settle on a resolution plan since 2017. In the past, lenders have attempted to invoke the scheme for sustainable structuring of stressed assets (S4A) for this account. The attempt failed. Last year, the consortium of lenders tried to sell the company to prospective bidders. The process, however, has not yielded any responses.

As such, insolvency proceedings are a likely option, the people quoted above said.

Jindal Thermal Power

For Jindal India Thermal Power, which operates a 1,200-megawatt power plant in Odisha, lenders have been looking to resolve over Rs 6,000-crore stressed debt. Lenders had referred the account for insolvency in July 2018. However, the reference had to be withdrawn after the Supreme Court scrapped the RBI’s earlier stressed asset resolution framework.

Lenders will likely initiate a fresh insolvency application for the account, the people quoted above said.

Garden Silks and Aban Group

Decisions are pending in two cases — Garden Silks and Aban Group — where lenders are unclear about the path to follow.

Lenders have attempted resolution for Garden Silk Mills, which owns the iconic Garden Varelli sarees. However, attempts to sell the company to other bidders has not led to any resolution. Initial talks fell through after bidders offered a very low price for the company, implying a large haircut for lenders involved.

Similarly, lenders had looked at a one-time settlement plan with the promoters of Aban Group in 2018, which fell through. Central Bank of India had filed for an insolvency proceeding against the company in October 2019. Proceedings were withdrawn after the promoters, once again, offered to settle the debt. However, a settlement is still pending.