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| SBI seeks RBI intervention for dues from STC arm |
| Abhijit Lele / Mumbai Aug 22, 2009, 01:04 IST |
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State Bank of India (SBI), the country’s largest lender, has asked government-owned State Trading Corporation of India (STC) to come up with a “workable solution” for STCL, the latter’s wholly-owned subsidiary, to repay Rs 1,300 crore of bank loans. The bank is also approaching the Reserve Bank of India to explore various solutions for repayment.
In addition, banking sources said SBI has asked STC, where the government holds a 91 per cent stake, to factor in the liability before any dividend payment.
Further, in its letter to RBI, the public sector lender has said the loans, sanctioned by banks such as SBI and Vijaya Bank, were given keeping in mind the ownership pattern of the Bangalore-based company.
The development comes days after rating agency Icra 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.
The agency had also said that in the absence of a guarantee from STC, the parent, the debt restructuring process was unlikely to work out anytime soon. As a result, STCL would need to meet its obligations over the next few months as against a much longer period envisaged earlier. “Also, the prospects of debt repayment through disposing inventory are extremely weak, as not only has the value of stock eroded steeply, but the ownership of the same remains doubtful. Moreover, the proceeds would largely be apportioned towards payment of port dues,” Icra said in a statement.
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.
While STCL’s financial results were unavailable, during the last financial year, STC reported a net profit of Rs 78.5 crore on net sales of Rs 19,786 crore. During the quarter ended June 2009, net profit rose 31.2 per cent to Rs 20.9 crore. Net sales went up by 24.4 per cent to Rs 5,281.5 crore during the period.
STC shares closed 0.18 per cent higher at Rs 306.25 today on the Bombay Stock Exchange.
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