The total debt (of two entities) to be taken up by Corporate Debt Restructuring (CDR) is pegged at Rs 5,800 crore. Winsome’s CDR exposure is pegged around Rs 3,900 crore while Forever exposure is about Rs 1,900 crore.
One public sector executive said finally the company promoter Mehta came in person for Corporate Debt Restructuring (CDR) group meeting. The proposal for debt recast had come up before CDR forum last month. But lender’s had insisted on promoters presence for discussions. Being ill, Mehta was unable to attend meetings with lender’s in the past.
The future course of finalizing CDR package for two companies is linked to promoter’s commitment to bring in their contribution upfront, forensic report of accounts by auditors and techno-economic feasibility study.
Another senior banker said Reserve Bank of India has prescribed strict norms for cases whose debt will be restructured after June 01, 2013. Promoters have to cough up their share of contributions in the beginning.
The public sector lender Central Bank of India has already treated Winsome Diamonds account as non-performing asset in the first quarter ended June 2013. Its exposure is about Rs 1,000 crore.
In a separate development, the company has mooted a proposal for tripartite agreement involving lenders, company and its distributors and retailers who hawk company’s products. This pact would give lenders right to start legal action for recovery (from distributors and retail chains) in event of default.
With almost all its business transacted overseas, Winsome's exposure to currency volatility and gold prices had always been high. As the prices crashed, its liquidity came under severe pressure and, for the first time, the company failed to pay its installment to bullion banks—foreign banks that sold gold to Winsome.
These banks were selling gold to winsome against guarantees by a clutch of Indian public sector banks. A consortium of lenders, including Punjab National Bank and Canara Bank, had issued letters of credit to Winsome for buying gold.
However, after the firm failed to pay the bullion lenders, the latter invoked all the guarantees, ballooning the company's loan liability 10 times to Rs 4,000 crore.