Promoters to infuse $50 mn into Winsome

Seek 2-year payment holiday plus 8 year repayment time

The promoters of troubled jewellery maker, Winsome Diamonds and Jewellery Ltd have offered to infuse $50 million as part of a restructuring package, a senior company official said. Lenders had issued letters of credit (LCs) to Winsome for buying gold. However, after the firm failed to pay the bullion to lenders, the latter invoked the LCs.

A consortium of lenders to Winsome (formerly Su-Raj Diamonds), including Punjab National Bank and Canara Bank, are in talks with promoters (Jatin Mehta) for restructuring the company’s Rs 4,000-crore debt. SBI Capital Markets and IDBI Capital Markets are involved in hammering out a package. As a part of the proposed package, the company has sought conversion of the entire devolvement into a working capital term loan. The proposal from the company envisages a two-year moratorium period and eight years to pay back the loan, the official added.

Bankers involved in the negotiations said lenders are assessing the business prospects and viability aspects. It is an intricate task to see where the cash flows will come from and business plans and feasibility. Banks may probably try to shorten the repayment period (seven to eight years). The base rate is 10.5 per cent.

Banks have indicated they would firm up restructuring in the present or next quarter (July-September). Going by Reserve Bank of India’s revised norms for restructuring debt, banks will have to make substantial provisions at the rate of 3.5 per cent.

“The wholesalers whom we supply to, have promised the banks that we will pay $100 million every year,” the official said. In any case, the exposure was fully secured by Stand-by Letters of Credit of Indian banks. In May, rating agency CRISIL had downgraded Su-Raj Diamond Industries and two of its entities to the “D” grade, following default in repayments to lenders.

The delays were caused by a weakening in Winsome group’s liquidity due to a sudden stretch in its receivables, CRISIL said. The two group entities downgraded are Winsome Diamonds Ltd and Forever Precious Jewellery Ltd. The group has not been receiving any payments from most of its customers since early March, unlike earlier, when it received payments from them regularly, CRISIL said.