The corporate debt restructuring (CDR) cell is proving to be a 'win-win' case for financial intermediaries and India Inc alike.
Ever since its inception 18 months ago, banks and institutions have managed to prevent assets aggregating Rs 56,794 crore (Rs 567.94 billion) from going to the seed even as liabilities of corporates, which were affected by internal and external factors, have been restructured.
The CDR cell has received 108 proposals, aggregating Rs 64,567 crore (Rs 645.67 billion) for restructuring since its inception.
It approved 72 corporate proposals worth Rs 56,794 crore (Rs 567.94 billion); closed/ rejected 19 proposals amounting to Rs 2,501 crore (Rs 25.01 billion); and is processing 17 proposals aggregating Rs 5,272 crore (Rs 52.72 billion).
Proposals under CDR generally entail extending the repayment period of loans, converting unserviced portion of interest into term loans and reducing the rate of interest on outstanding advances.
Currently, 44 banks and financial institutions are part of the CDR mechanism. Seven iron and steel companies, including Essar Steel, Ispat, JVSL, SJK Steel, Mukand, accounted for a major chunk -- 42.5 per cent [Rs 24,149 crore (Rs 241.49 billion)] -- of the total Rs 56,794 crore (Rs 567.94 billion) worth of restructuring proposals cleared by the cell.
Nine petrochemical companies, including Essar Oil, SPIC and Haldia Petrochemicals, accounted for 25 per cent [Rs 14,277 crore (Rs 142.77 billion)] of the proposals approved.
A couple of fertiliser companies, Nagarjuna Fertilisers and GSFC, accounted for 8.25 per cent [Rs 4,690 crore (Rs 46.90 billion)] of the proposals approved.
Two power companies and three cement companies, including India Cement and Priyadarshini Cement, accounted for 5 per cent [Rs 2,916 crore (Rs 29.16 billion)] and close to 4 per cent [Rs 2,120 crore (Rs 21.20 billion)] respectively of the total proposals cleared.
About nine textile companies accounted for three per cent [Rs 1,734 crore (Rs 17.34 billion)] of the total restructuring proposals cleared.
While 36 corporate proposals, aggregating Rs 32,717 crore (Rs 327.17 billion), have already been implemented, an equal number of proposals worth Rs 24,077 crore (Rs 240.77 billion) are under implementation.
CDR is a non-statutory voluntary mechanism based on debtor-creditor agreement and inter-creditor agreement and covers only multiple accounts/syndication/consortium of accounts with outstanding exposure of Rs 20 crore (Rs 200 million) and above by banks/institutions.
The system is applicable only to standard and sub-standard accounts. However, potentially viable cases of NPAs get priority. In no case, the request of any corporate indulging in wilful default or malfeasance is considered.
