Af­ter Failed CDR, Banks to Sell Ma­jor­ity in Vishwa In­fra

GO­ING THROUGH THE GRIND Hyd in­fra co has de­faulted on loans of over 1,000 crore

The Economic Times - - Markets: Beating Volatility - Saloni.Shukla@ times­group.com

Mum­bai: A State Bank of In­di­aled group of lenders is look­ing to sell a con­trol­ling stake in Hy­der­abad-based Vishwa In­fra, which has de­faulted on loans of more than .₹ 1,000 crore. Bids will be sought from po­ten­tial suit­ors that in­clude pri­vate equity firms and strate­gic in­vestors, bankers aware of the mat­ter said. Vishwa In­fra did not re­spond to ET’s queries.

“We have in­voked strate­gic debt re­struc­tur­ing (SDR) in the case of Vishwa In­fra af­ter the CDR (cor­po­rate debt re­struc­tur­ing) failed,” a banker in­volved with the mat­ter said.

The com­pany, which is mostly en­gaged in build­ing wa­ter sup­ply and sewage projects, had won ap­proval for a CDR pack­age that in­volved reschedul­ing loans of nearly .₹ 500 crore in FY14. “Af­ter we ap­proved the CDR pack­age, the liq­uid­ity po­si­tion of the com­pany im­proved for a limited pe­riod but de­te­ri­o­rated later,” said an­other banker. “We will con­vert a part of debt to ma­jor­ity equity in the com­pany.” The Re­serve Bank of In­dia has been push­ing banks to clean up their books and go af­ter loan de­fault­ers. In the first stage, banks take com­pa­nies through the CDR process, which in­volves hair­cuts and reschedul­ing pay­ments. When that fails, the lenders con- vert the debt to equity and seek to rope in a strate­gic in­vestor un­der the SDR process. Bankers said Vishwa In­fra had been fi­nan­cially stretched due to its limited ex­pe­ri­ence in ex­e­cut­ing large or­ders. The govern­ment has said that a dis­tinc­tion needs to be drawn be­tween com­pa­nies that are de­fault­ers due to fraud and those that were forced to re­nege on pay­ments be­cause of a down­turn in the econ­omy and other rea­sons out­side their con­trol, as has hap­pened with many of In­dia’s in­fras­truc­ture projects.

Backed by global in­vestors Olym­pus Cap­i­tal and New En­ter­prise As­so­ci­ates, Vishwa In­fra had an or­der book of .₹ 1,366.92 crore on De­cem­ber 31, 2014. In FY14, the com­pany reg­is­tered a to­tal in­come of .₹ 520.93 crore with a net loss of .₹ 75.02 crore.

The com­pany spe­cialises in pipe­line con­tracts, wa­ter treat­ment plants, sewage treat­ment plants, wa­ter reser­voirs, pump houses, in­stal­la­tion of elec­tro me­chan­i­cal equip­ment etc. The other in­fras­truc­ture ver­ti­cals that the com­pany op­er­ates in are roads and power trans­mis­sion. Banks have in­voked SDR in com­pa­nies such as Elec­tros­teel Steels, Ankit Metal and Power, Ro­hit Ferro-Tech, IVRCL, Gam­mon In­dia, Mon­net Is­pat and En­ergy, VISA Steel, Lanco Teesta Hy­dro Power, Jy­oti Struc­tures, Alok In­dus­tries and Unity In­frapro­jects.

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