Money & Banking
Corporate debt restructuring up 3-fold to Rs68,000 crore in FY12

The sharp increase in CDR cases has continued unabated in FY13 as well and there were about three dozen cases involving nearly Rs20,000 crore referred to CDR cell in the June quarter


New Delhi: In a clear indication of growing financial difficulties of the corporate, a record number of 87 cases with an aggregate debt of about Rs68,000 crore or over $12 billion were referred for Corporate Debt Restructuring (CDR) last fiscal, reports PTI.

While the amount of such distressed debt has grown nearly three-fold from Rs23,000 crore in 2010-11, the number of cases also grew sharply by 78%.

The total corporate debt sought to be restructured last fiscal accounts for nearly one-third of the aggregate debt amount referred for restructuring ever since the CDR mechanism was established by RBI about 10 years ago in 2001.

The preliminary data suggests that the sharp increase in CDR cases has continued unabated in the current fiscal, as nearly three dozen cases involving nearly Rs20,000 crore were referred to CDR cell in the first quarter ended 30 June 2012.

RBI had helped set up CDR system in 2001 to help the corporates facing financial difficulties due to "factors beyond their control and due to certain internal reasons."

Besides helping the corporates manage their huge debts, it also seeks to safeguard the interest of banks and financial institutions through restructuring of certain debt cases.

High interest costs, along with overall sluggishness in the domestic and global economies have made it difficult for the companies to meet their debt obligations -- resulting in a spurt in CDR cases.

As per the CDR data, a total of 50 cases involving an aggregate debt amount of Rs40,000 crore were approved during the last fiscal. In comparison, a total of 27 cases with Rs7,000 crore were approved for CDR exercise in 2010-11.

During the fiscal ended 31 March 2010, a total of 31 CDR cases were approved for debt of Rs18,000 crore.

Experts say that rising number of CDR cases does not augur well for the banking sectors, as also for the corporates.

The aggregate amount of debt referred for CDR -- since this system began in 2001 -- crossed Rs2 lakh crore in 2011-12, when it reached Rs2.1 lakh crore.

Out of the total 392 cases referred for CDR so far, a total of 292 cases (Rs1.50 lakh crore) were approved at the end of last fiscal, while 59 cases (Rs20,817 crore) were rejected. Besides, 41 cases involving debt of Rs35,161 crore were under finalisation of restructure packages.

Industry-wise, the iron and steel sector account for the largest share of total restructured debt (26%), followed by infrastructure (11 pc), textiles (8 pc), telecom (6 pc) and fertilisers (5.6 pc).

In terms of number of approved cases, textiles is on top (59), followed by iron and steel (31), sugar (26), paper and packaging (17), chemicals (15) and infrastructure (13).


Kingfisher, lenders meet inconclusive

The meeting could not make any headway as the Vijay Mallya-led Kingfisher Airlines could not commit on fresh fund infusion


Mumbai: The much-anticipated meeting between the management of the crippled Kingfisher Airlines with the consortium of 17 banks, which have a combined stressed exposure of over Rs7,500 crore to airline, on Thursday failed to make any headway, reports PTI.

The meeting, held in Mumbai at the State Bank of India (SBI) headquarters, was attended by most of the lenders and the airlines' chief executive officer Sanjay Aggarwal and chief financial officer HG Raghunath.

Though the airline made a presentation, they could not commit on fresh fund infusion, according to bankers.

Lenders' sources said the meeting could not make any headway as the company could not commit on fresh fund infusion.

They said that they have appointed HDFC Securities to value two of the already pledged properties of Kingfisher--the Airline House in suburban Andheri here which has a market value of around Rs90 crore and a villa in Goa, having a market value of Rs30 crore.

According to banking sources, the existing 17 lenders also discussed the loan sell-off by ICICI Bank (worth Rs430 crore) early this week to a hedge fund run by Srei Infra Finances.

Bankers, who have over 20% stake in the airlines following last Corporate Debt Restructuring (CDR), also said they may meet next month.

At the last meeting of the consortium in March, the bankers insisted on the promoters bringing in at least 50% of the fresh funding requirement (around Rs2,000 crore) as a precondition for any new advances to the airline, after it stopped servicing its loan from January.


Telcos to buy wind, solar power to reduce carbon footprint

Telecom towers in the country burnt diesel worth over Rs12,500 crore last fiscal to run generator sets


Mumbai: Apex telecom industry bodies -- GSM operators body Cellular Operators Association of India (COAI) and CDMA lobby Association of Unified Telecom Service Providers of India (AUPSI) said they have placed a power purchase order with seven renewable energy generation companies (Rescos) to power as many as one lakh telecom towers, reports PTI.

"The umbrella body of telecom tower companies, Tower & Infrastructure Providers Association (TAIPA), had two months ago sent a request for proposal (RFP) to seven Rescos like Moser Bayer and ABB, informing of readiness to buy their entire generation to power our 1 lakh towers," Cellular Operators Association of India (COAI) director general Rajan S Mathews told PTI.

Though the initial response was positive, Rescos have some doubts about the viability of such projects and that they are in talks with companies to iron out the issues, he said.

Telecom towers in the country burnt diesel worth over Rs12,500 crore last fiscal to run generator sets, according to an estimate.

When asked about sharing telecom towers to bring down air pollution as also the alleged radiation threat (which both Coai and AUPSI today termed as "unfounded and scientifically not proven"), Mathews said: "Already 70 per cent towers have over two customers and the rest have three to four."

"There is so much misrepresentation about incidence of brain tumours and use of cell phones. The incidence of brain tumours in the country has been unchanged over the past one decade. Hence, introduction of cellular phones and mobile services does not seem to have increased the risk of brain tumours and cancer," Mathews said in a presentation citing many independent studies.

He further claimed that radio waves have been in the environment since times immemorial and the same waves used in wireless telecommunications have not been scientifically proven to cause any harmful effects to human health.

Mathews also said strength of radiation received from base stations is considerably lower than the strength of radiation from radio and television transmitters, and 15 years of studies examining a potential relationship between radio frequency transmitters and cancer have not provided evidence that exposure to mobile towers increases the risk of cancer.


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