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‘No over-dues’ with banks, says Bajaj Hindusthan

Harish Damodaran
The Rs 2,300 crore amount excludes the optionally convertible debentures (OCD) aggregating Rs 3,483.25 crore that the company had issued to lenders in December 2017 under an earlier Scheme for Sustainable Structuring of Stressed Assets (S4A).

Bajaj Hindusthan Sugar Ltd (BHSL) has said that its account with banks is regular and standard as on date, ruling out any possibility of it being referred to the National Company Law Tribunal (NCLT).

State Bank of India (leader of the lenders consortium) has confirmed that our account is regular and standard, with no overdue installments, as on June 26. Also, our total bank liabilities have come down from around Rs 4,700 crore to Rs 2,300 crore between December 31, 2017 and March 31, 2019, a top official from India s largest sugar producer told The Indian Express.

The Rs 2,300 crore amount excludes the optionally convertible debentures (OCD) aggregating Rs 3,483.25 crore that the company had issued to lenders in December 2017 under an earlier Scheme for Sustainable Structuring of Stressed Assets (S4A). The OCDs have not been included in our loan figure, because we anticipate that they will be converted into equity shares and not remain a repayable loan in the company s books. Even in the unlikely event of non-conversion, they are repayable over 13 years from 2024-25, after the existing loans are fully repaid, the official stated.

The Reserve Bank of India s (RBI) circular dated February 12, 2018 had mandated banks to implement resolution plans (RP) in cases of even a single day s default by companies with Rs 2,000 crore or more of outstanding loans. If the RPs did not yield results within 180 days from the date of default, the lenders had to compulsorily file insolvency applications with the NCLT. A subsequent RBI circular on June 7 this year, however, extended the one-day rule to 30 days, while giving banks complete discretion with regard to initiation of insolvency proceedings.

Banks are now required to implement RPs only 30 days after default and there is no reference to NCLT. Even if the case isn t resolved within 180 days thereafter, banks have to merely make a 20 per cent additional provision against the loan. Moreover, even if borrowers delay their repayment by a couple of days or weeks, the moment the dues are paid, the total 210-day period will automatically be counted from the time they become irregular once again. The time frame for the 210-day limit will keep shifting until a company is unable to pay at all. In our case, we have no overdue as on today and so there s no issue, the official claimed.

He, however, admitted that BHSL had huge cane over-dues payable to farmers. These, as on June 30, stood at over Rs 3,180 crore or nearly 63 per cent of the value of cane bought during 2018-19 crushing season.

The quantum of cane dues is directly proportionate to our volume of business. Being the largest sugar producer in South and Southeast Asia, cane dues are inevitable and we can pay these only from sale of our sugar stocks. Unlike in other businesses, our raw material (cane) has to be procured and processed in a period of 4-5 months, whereas the end-product (sugar) is sold over 1-1.5 years, the official added.

With an aggregate cane crushing capacity of 136,000 tonnes per day, BHSL s 14 mills across Uttar Pradesh produced 15.5 per cent of the state s sugar output in 2018-19. During the season, the 14 mills crushed 158.80 lakh tonnes of cane sourced from an estimated two lakh-plus farmers.