NPA crackdown: Read here for financial details of these 12 big loan defaulters likely to go for bankruptcy
Monnet Ispat had a debt of over Rs 10,000 crore while its net worth turned negative to Rs 1,602 crore in FY17
Indian banks have initiated a big crackdown on bad loans armed with the Insolvency and bankruptcy code (IBC). The attack on the non-performing assets (NPAs) began first in 2015 when the Reserve Bank of India (RBI) stipulated norms for early recognition of stressed assets in the banking sector. Subsequently, the RBI came with a March 2017 deadline for banks to clean-up their balance sheets by disclosing all the hidden NPAs. While this exercise pushed banks to account for a big chunk of impaired assets, the recovery of money still remained a major concern for the sector and the policymakers.
But, the passage of bankruptcy code came with the promise of a major change in banks’ NPA battle. Under this, if the majority lenders agree, banks can take companies to National Company Law Tribunal (NCLT) with a request for time bound resolution plan. If the resolution process fails within a maximum of 270 days, insolvency process is initiated against the concerned company. Under a mutually agreed framework between banks and other stakeholders in the firm, the proceeds from the liquidation process will be shared.
On 13 June, RBI said its internal committee has shortlisted 12 companies where banks can initiate insolvency proceedings. While the names of these firms have not been disclosed, reports (read here, here , here, here and here) have emerged naming possible candidates that would have found place in the RBI list. Firstpost has not independently verified the identity of these companies, but assuming the names appeared in the media reports are correct, we have done an analysis of their key financial parameters such as total debt and networth to get an idea of what is in store for banks if they indeed take these companies for liquidation.
Here goes the financial details of these 12 companies:
Essar Steel: The company's total income remained flat at Rs 14,380 crore in FY16 as compared to its earlier two years. However the company posted a net loss of Rs 5,800 crore in FY16 as against net profit of Rs 648 crore in FY15. As per its latest available annual report for 2015-2016, its total debt stood at Rs 29,488 crore while the company had a healthy total assets of Rs 62,700 crore. Its net worth were at Rs 8,617 crore as of 31 March 2016.
However, this piece in BloombergQuint says the company owes banks nearly Rs 45,000 crore and has been in talks to restructure its debt for some time now. In January, Prashant Ruia, chief executive officer of Essar Group told BloombergQuint that a restructuring deal was “weeks away.” This, however, has not fructified.
Lanco Infratech: The company had a debt of Rs 43,502 crore as of FY17 according to CapitalinePlus database. The company reported net loss for the sixth consecutive year from FY12 to FY17 amounting to Rs 8,280 crore. Company's total income almost halved from Rs 15,291 crore in FY13 to Rs 7,510 crore in FY17. It had negative net worth of Rs 2,074 crore for the fiscal ended 31 March 2017. Its total assets of Rs 45,065 crore is just a tad higher compared to its debt.
Recently while announcing its March-quarter results the company stated "At present the group’s operating assets are not generating envisaged revenues on account of various factors beyond the control of the company, such as short supply of gas, partial procurement of power, pending tariff clarity and part payments from the customers, posing challenges for meeting the cash flow needs." The company's share price reported a fall of 16.1 percent in past three trading sessions following the RBI's announcement.
Bhushan Steel: Bhushan Steel, as on 31 March, 2016, owed total gross debt of Rs 42, 356 crore to a clutch of banks, primarily state-run lenders including State Bank of India (SBI) and Punjab National Bank (PNB). The loan was declared NPA by banks in early 2016. As on 31 March, 2016, the company had a total net worth of just Rs 4,658 crore and total assets worth Rs 48,327 crore that includes its plants and real estate assets. The company posted a total income of Rs 13,778 crore and net loss of Rs 3,121 crore in fiscal 2017. Not surprisingly, the share price of the company crashed as much as 10 percent after RBI announced its decision to shortlist 12 big defaulters.
Bhushan Power and Steel: Bhushan Power & Steel is an unlisted firm whose account is in trouble for quite some time, says this report in Financial Express. The company owes banks around Rs 37,248.26 crore. This report in Economic Times says at least six meetings of joint lenders' forums have been called next week to finalise the resolution of loans aggregating nearly Rs 1.5 lakh crore involving Essar Steel, Bhushan Steel, Alok Industries, Monnet Ispat, Jyoti Structures and Electrosteel Steels.
Alok Industries: The textile firm's total revenue fell from a high of Rs 24,620 crore in FY15 to Rs 8,988 crore in FY17. In the past two years it had recorded a total net loss of Rs 7,439 crore. Its gross debt stood at Rs 23,443 crore as of 31 March, 2017 while it had total assets of Rs 25,432 crore. Its net worth stood at Rs 1,703 crore. Shares of Alok Industries fell by 12.5 percent to Rs 2.67 after the RBI's announcement.
Monnet Ispat: Monnet Ispat's total income slumped from a high of Rs 3,307 crore in FY15 to Rs 1,275 crore in FY17. It logged a cumulative net loss of Rs 4,307 crore in the past three financial years. The company had a debt of over Rs 10,000 crore while its net worth turned negative to Rs 1,602 crore in FY17. Monnet's total assets stood at Rs 8,902 crore as of 31 March, 2017. In the past three trading sessions the company's shares were down by 10.7 percent to Rs 34.35.
Era Infra Engineering: The company has seen a gradual reduction in its total income. Its total income fell from a high of Rs 4,717 crore in FY13 to Rs 1,286 crore in FY17. It posted a combined net loss of Rs 3,706 crore in the past four financial years. Also, the firm's total gross debt stood at Rs 10,129 crore while its total assets were at Rs 8,377 crore. Like Lanco Infratech, this company also has a negative net worth of Rs 1,981 crore.
ABG Shipyard: ABG Shipyard's total revenue declined from a high of Rs 2,433 crore in FY12 to just Rs 38 crore in FY16. In three years up to FY16, the company logged in a total net loss of Rs 3,755 crore. It had a gross debt of Rs 8,742 crore while its total assets were less than its debt at Rs 5,926 crore. The company had a negative net worth of Rs 2,822 crore. Surprisingly, the company's share price remained flat in the past three trading sessions at Rs 10.50 even after RBI's NPA crackdown announcement.
Japyee Infratech: The company has seen its total revenue falling by 60 percent to Rs 1,164 crore in FY17 from Rs 2,897 crore in FY16. Its net loss widened from Rs 416 crore in FY16 to Rs 989 crore in FY17. The company had a total assets of Rs 14,871 crore while its gross debt was at Rs 8,606 crore. It had a net worth of Rs 5,921 crore as on 31 March, 2017. Jaypee's share price was marginally down after the RBI announcement as it fell by just 3.2 percent to Rs 11.55 on Friday.
Electrosteel Steel: The company has been consistently posting net losses in the past five financial years. Its combined net loss stood at Rs 3,457 crore between FY12 to FY17. However, its total revenue showed a tremendous rise from Rs 61 crore in FY12 to Rs 2,635 crore in FY17. According to the available data, its gross debt stood at Rs 7,505 crore while its total assets were lower than its debt at Rs 6,946 crore. The company had a negative net worth of Rs 568 crore. As per this Reuters report, a spokesman for Electrosteel said they had heard from their main lender that creditors wanted to initiate resolution of the unpaid loans through the National Company Law Tribunal. After the RBI's insolvency announcement, the company's shares declined by 14.5 percent to Rs 4.25 in three trading sessions.
Amtek Auto: The company's total revenue had a significant fall from a high of Rs 15,707 crore in FY14 to Rs 2,719 crore in FY17. Its net loss widened from Rs 1,699 crore in FY16 to Rs 3,253 crore in FY17. In the past three financial years, its total loss stood at Rs 5,673 crore. The company significantly reduced its debt from Rs 12,591 crore in FY16 to Rs 3,928 crore in FY17. Its total assets were at Rs 14,404 crore as on 31 March, 2017 while its net worth was at Rs 2,467 crore. Shares of Amtek Auto fell by 13 percent to Rs 29.30 on the bourses.
Jyoti Structures: Total revenue of Jyoti Structures nosedived from a high of Rs 3,666 crore in FY14 to Rs 916 crore in FY17. During the same period its net loss increased from Rs 9.37 crore to Rs 1,426 crore. Its total loss in past four financials years amounted to Rs 2,535 crore. The company had a gross debt of Rs 3,387 crore at the end of fiscal 2017, as against its total assets of Rs 1,885 crore. Interestingly, share price of Jyoti Structure showed a rise of 18.6 percent in the past three sessions to Rs 9.80.
Though DLF has moved up over the last two days, there is room for more. GMR Infrastructure said on Monday that it will be selling 30 percent stake in its unit GMR Energy (Singapore) Pte to Petronas.
Private sector ship-builder ABG Shipyard today said it has bagged a Rs 485 crore order to build a cadet training vessel for the Navy.
These 12 large accounts had become NPAs by end-March 2016 and Crisil estimates show the banks had already provisioned 40 percent for these NPAs worth Rs 2 trillion or about Rs 80,000 crore.