CDR-aided firms doing well

The two-and-a-half year old corporate debt restructuring (CDR) mechanism formed between banks and financial institutions (FI) has accepted to restructure the debt of 109 companies worth over Rs 66,800 crore so far.

Out of the 109 accounts being restructured 47 companies are performing above expectations or at least as per projections in terms of turnover and profit. These 47 companies are not confined to the well-performing sectors of the economy such as steel and cement alone.

Companies from diverse sectors such as sugar, paper, glass as well as chemicals are also showing good results post restructuring by banks and institutions, said sources.

Restructuring by CDR typically involves fresh funding by lenders, reduction in the rate of interest of old high cost loans, reschedulement of the loan repayment period, lenders standing guarantee for fresh funding and at times expansion of the company's capacity.

Out of the total of 109 approved cases, the overriding majority of them in terms of amounts involved are from the iron and steel sector followed by fertiliser companies, chemical companies and refineries; the numbers involved are indicated in the table. Telecom, power, cement, textile, sugar, auto components, infrastructure sectors among others constitute much smaller amounts.

Of the 109 cases, 61 cases are treated as 'fully implemented cases' with all the sanctions and disbursements already in place. Another 16 cases are accounts that have approved during the past 60 days while 32 cases are delayed in implementation.

The average repayment period of the restructured cases is 7-8 years. There are only about six cases in which the repayment period extends to 15 years. These include the very large sized accounts such as Essar Oil, Essar Steel, JISCO, Ispat and Mukand Steel. Some prominent CDR approved cases include India Cements, Nagarjuna Fertilisers, Spic, Haldia.

The CDR group has received 155 references worth Rs 75,380 crore for restructuring out of which 109 cases worth Rs 66,857 crore were approved, another 14 cases worth Rs 2,954 crore are in the process of getting approved while 32 cases worth Rs 5,568 crore were rejected by the group, said sources.