Lenders to Alok Industries to take control of company under SDR
Lead bank SBI has informed Alok Industries that SDR has been invoked on the company with the reference date being 27 November
Mumbai: Lenders to Alok Industries Ltd have decided to invoke rights under the so called strategic debt restructuring (SDR) route to convert part of their debt to majority equity, the textile company said in a statement to the stock exchanges on Wednesday.
“The company have been informed by its lead bank, State Bank of India (SBI)...vide their letter dated 18 January 2016 that as decided by the joint lenders’ forum (JLF) at their meetings held on 23 November 2015 and 11 December 2015, strategic debt restructuring (SDR) has been invoked on the company with the reference date being 27 November," the company said in a notification to the stock exchange on Tuesday. Under the SDR norms laid down by Reserve Bank of India (RBI), banks can convert part of their debt to majority equity in a firm which has defaulted on its payments.
Banks can hold this equity for a period of 18 months without attracting higher provisions on the loan account. Before the end of the period, lenders must find a buyer for the stake. As of 30 September, Alok Industries had a total standalone debt of ₹ 12,642.36 crore.
In the September quarter, the company reported standalone net loss of ₹ 242.20 crore compared with a net profit of ₹ 45.36 crore in the same quarter a year ago. Net sales for the quarter were ₹ 3,167.91 crore, down 15.4% from ₹ 3,744.84 crore a year ago.
So far, banks have invoked SDR in 15 accounts where the total loans stand at about ₹ 83,100 crore, Religare Institutional Research estimated in a 4 January report. Religare analysts expect another ₹ 63,900 crore worth of loans to enter the SDR process in the next 12-24 months.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!