Winsome Diamonds in talks with banks to restructure debt

Winsome Diamonds and Jewellery (formerly Su-Raj Diamond Industries) is in talks with banks to restructure its debt and recovery of dues on export bills.

In a filing on the Bombay Stock Exchange, it said it had taken steps to restructure its debts and recover bills.

Last week, CRISIL had downgraded it and two of its entities to 'D' grade, following default in repayments.

The ratings downgrade came after delays of over 30 consecutive days by the company in servicing its maturing letter of credit obligations. The delays was due to weakening of Winsome group's liquidity due to a sudden stretch in its receivables.

A senior public sector bank official said the company had defaulted on payment to some foreign banks. These foreign banks had extended money against the guarantees provided by a few Indian banks including the Punjab National Bank (PNB).

Following the default, international banks had invoked guarantees, making it a funded exposure for the Indian banks. Since payments are not coming through, there is risk of the exposure turning bad loans.

The extent of exposure (following invocation of guarantees) is in excess of Rs 4,000 crore.

"This event has snowballed into a crisis. Banks have approached the Reserve Bank of India to look for a solution," said a senior PNB official, who declined to further elaborate on it.

Meanwhile, Gems and Jewellery Export Promotion Council (GJEPC) had received letters from the banks, asking the council to intervene and mediate as the company has defaulted on loans.