SBI planning to invoke personal guarantees of Bajaj Hindusthan promoters

The company owes Rs 4,771 crore to banks and has already availed two debt restructuring schemes, leading to massive haircuts taken by lenders

State Bank of India (SBI), the lead bank of Bajaj Hindusthan Sugar (BHSL), is planning to invoke the personal guarantees of promoters after the company was sent for debt resolution to the Allahabad Bench of the National Company Law Tribunal (NCLT). 
 
The NCLT is yet to admit SBI-led banks’ petition to start the corporate insolvency resolution process for BHSL.  
 
The company owes Rs 4,771 crore to Indian banks and has already availed of two debt restructuring schemes, leading to steep haircuts taken by lenders.
 
“We are taking steps to invoke the personal guarantees of promoters in accordance with the Supreme Court’s directions in this regard in May this year,” said a banker.
A spokesperson for BHSL declined to comment.
 
SBI withheld comment on the matter related to a particular account.
The company was sent for debt restructuring in early August after it failed to fulfil certain requirements of the earlier debt restructuring plan.
 
The debt was classified as a non-performing asset with retrospective effect from June 2017, stated the SBI petition to the NCLT.

In its petition, SBI said the cause of action continued to arise when banks required the company to maintain financial discipline, but it did not comply with the terms of settlement.
 
The cause of action also accrued to SBI on each and every day when the company acknowledged its liability but did not pay the bank’s dues, observed the petition.

As India’s leading sugar and ethanol manufacturing company, BHSL has 14 factories with an aggregate capacity of crushing 136,000 tonnes of sugarcane daily.

It has six distilleries with the capacity to produce 800 kilolitres of industrial alcohol per day.

For 2021-22, the company reported revenues of Rs 5,569 crore and a loss of Rs 218 crore.

Earlier, the company said in a stock market statement that its optionally convertible debentures (OCDs) worth Rs 3,483.25 crore, issued to the joint lenders’ forum in accordance with the Scheme for Sustainable Structuring of Stressed Assets (S4A Scheme) for converting part of the unsustainable debt into equity, provide the holder the option to exercise the right.

The company has not taken the provision on coupon rate interest on such OCDs and has not considered the yield to maturity (YTM) after March this year.
 
The management is of the view that the coupon rate interest and YTM will be treated in accordance with the financial restructuring plan submitted by the company to the lenders. 
 
But the auditors have drawn up qualifications for non-provision of YTM premium up to June 30, as well as coupon interest on OCDs for the quarter ended June this year.