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
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.