Lenders, led by Axis Bank, invoked RBI's SDR norms at Icomm Tele last year, and are now looking to split the firm's two business lines before selling stake in both
Mumbai: The lenders to Icomm Tele Ltd, led by Axis Bank Ltd, are considering splitting the Hyderabad-based engineering company’s two main business lines—telecom towers and defence equipment—into separate companies, before selling stakes in both, two people familiar with the matter said on condition of anonymity.
The company had a debt of Rs1,702 crore on its books as of January 2016, and is now controlled by its lenders.
“As a policy, we don’t comment on client-specific transactions," a spokesperson for Axis Bank said in an email.
Emails and text messages sent to Icomm Tele promoter and managing director Sumanth Paturu and Sreekumar Kurup, a director at the firm, did not elicit any response.
Established in 1989, Icomm Tele is an engineering, procurement and construction (EPC) company that focuses on providing infrastructure solutions, primarily in the telecom, power, and the water and waste-water sectors.
Apart from its EPC business, the company is also engaged in designing, developing, manufacturing, installing and commissioning communications equipment for telecom operators and for the defence sector.
Icomm Tele was a vendor to the Indian army’s cruise missile programme ‘Brahmos’.
But it has run into rough times, largely on account of the slowing of the infrastructure sector, according to one of the two people cited above.
The company’s financial performance deteriorated from 2010, when it was doing well enough to file documents to sell shares. That public offering was subsequently shelved.
From Rs1,063 crore in financial year 2007-08, the company’s revenue dropped to Rs440.9 crore in fiscal year 2014. The company reported a loss of Rs84.5 crore in FY 2014. Latest revenue and profit/loss figures are unavailable.
“Lenders, who had initiated debt restructuring at the company under the corporate debt restructuring (CDR) mechanism back in 2012, invoked strategic debt restructuring (SDR) at Icomm Tele last year and they have converted part of their loans to a majority stake in the company," said the first person,
Under the latest debt resolution plan at Icomm Tele, bankers are splitting the company into two. One of them will house the power transmission and telecom tower EPC business.
The other will have the defence business, said the second person.
“The tower business will be transferred to a company called Icomm Ltd, and the defence business will be transferred to Icomm Electronics Ltd. The move is likely a precursor to sell stakes in these businesses," this person added.
A resolution could also help the company’s private equity investors—Kotak Private Equity and Tano Capital—realize some returns from their almost decade old investment in the company. The two funds had invested in Icomm in 2008.
Spokespersons for both Kotak Private Equity and Tano Capital did not respond to e-mails seeking comment.
Moves to resolve debt-related issues at Icomm Tele come at a time when the central government and the Reserve Bank of India have intensified their efforts to resolve the Rs10 trillion of non-performing assets clogging the Indian banking system.
Last month, the government notified an ordinance to the Banking Regulation Act, giving RBI broad powers to deal with specific bad loans cases, to speed up resolution.
Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.
Never miss a story! Stay connected and informed with Mint.
our App Now!!