|
| Lenders may refer STC unit to debt tribunal |
| Abhijit Lele / Mumbai Nov 16, 2009, 00:38 IST |
|
With very little chance of repayment from STCL, a Bangalore-based ailing subsidiary of State Trading Corporation, lenders are exploring an option to drag the company to Debt Recovery Tribunal (DRT) as part of efforts to get back dues.
STCL owes over Rs 1,300 crore to lenders including State Bank of India (SBI) and Vijaya Bank. STCL has raised varying amounts from eight banks, led by Vijaya Bank to which it owes roughly Rs 290 crore. Bangalore-based public sector bank has had to make huge provisions for defaults from this account.
“Approaching Tribunal is one of the options before us. A common view is yet to emerge on the use of option”, top official of the small government-owned bank. DRT is seen as a forum for expeditious adjudication and recovery of debts due to banks and financial institutions . The other banks which have advanced these amounts include IDBI Bank, Union Bank, Canara Bank, UCO Bank, Axis Bank and YES Bank.
“Loans were given keeping in mind the ownership pattern of the Bangalore-based company. Lenders are patiently following up this case with the government,” said a senior executive with other public sector bank. K C Ponnana, managing director of STCL, was not available for comment.
STCL was set up in 1982 for promoting the cardamom trade. But, in the past decade the company has moved to a diversified set of commodities, with focus on metal scrap, iron ore, blast furnace slag, spices and agricultural products.
In August, SBI had asked government-owned State Trading Corporation of India to come up with a ‘workable solution’ for STCL to repay Rs 1,300 crore of bank loans. The country’s largest lender had also shot-off communication to the Reserve Bank of India to explore various solutions for repayment.
In addition, banking sources said SBI had asked STC, where the government holds a 91 per cent stake, to factor in the liability before any dividend payment. The rating assigned to STCL’s lines of credits has already been downgraded by agency Icra. The rating agency has downgraded STCL’s long-term rating assigned to Rs 515 crore of fund-based limits from LBB to LC.
It had also downgraded the short-term rating of Rs 1,235 crore of non-fund based limits from A4 to A5. The revised ratings indicate the lowest credit quality. While STCL’s financial results were unavailable, during the last financial year, STC reported a 78.8 per cent drop in net profit at Rs 10.14 crore in the quarter ended September 2009. Its net sales also dipped by 12.38 per cent to Rs 3,609.15 crore during the period.
|
|
|
|
|
|
|
|
|
|
 Read Business news in |  |
|
|
|
|
|
|
Advertisements |
|
|
|
|
|
|
|
|
|
|
Content Guide
