With lenders in control of management, the debt-laden infrastructure company IVRCL prefers to do whatever it takes to find a new investor, even if it meant a long wait, before exploring options to decide the future course.
"We would like to sit together with our new investor and then decide the way forward on a financial turnaround plan. We would prefer a solution that can be a win-win for the lenders, the promoters and the company, " a senior IVRCL official told Business Standard on Wednesday.
The management had not been able find a buyer in two long years after the strategic debt restructuring
(SDR) came into effect even though the lenders were required to transfer 26 per cent of their shareholding to a new promoter within 18 months of SDR
as per the Reserve Bank of India (RBI) guidelines. The senior management official ruled out the possibility of approaching the insolvency tribunal at this stage even as the company in its latest filing stated that 'no investor has come forward with a binding offer to acquire the lenders stake' so far.
"The due diligence process has also contributed to the delay in getting the investor on board by now. But we are in advanced talks with a potential investor and hopeful of concluding the deal" the senior IVRCL official said on condition of anonymity and without giving a definite time frame as to by when the new promoter was expected to come on board.
With the accumulated losses inching closer to a whopping Rs 3,000 crore on top of a huge debt obligation amounting to Rs 5,556 crore, which include repayment obligations for the next twelve months, not much time seems to have been left with the management to put in place road map to achieve financial revival.
For the quarter ended September, 2017, the company has reported a net loss of Rs 285 crore on a total income of Rs 411.5 crore during the period.
While the expenditure stayed higher than the total income in every quarter even after the finance costs were taken out of the equation, the company management bets on the huge claims that are to be settled through arbitration by the governments towards the project delays to reverse this picture.
"We have man power capable of executing the projects worth of Rs 5,000 crore annually whereas the current turnover is just around Rs 2,000 crore. Things like this will certainly add to our costs. There are huge claims that are to be settled by the governments. We have been making provisions for the projects that were delayed beyond 4-5 years. If these factors are taken into account, the revenues would higher than the expenditure," the official said.
Despite being in deep financial troubles, the company, which has 85 subsidiaries and 10 BOT projects, is currently executing 170 projects as the failure to execute the projects will trigger the invocation of corporate guarantees by the clients.
Lenders have initiated insolvency proceedings against Hindustan Door Oliver and HDO Technologies Limited, two of its subsidiaries while some of the creditors had filed winding up petitions against the parent company.
Adding to these troubles, the Empowered Group of the Corporate Debt Restructure
(CDR) had exited CDR
package, resulting in a claim for recompense of Rs 347.81 crore. After the CDR
failed to achieve the financial turnaround, the joint lenders forum had decided to adopt SDR
in November, 2015.