Bankers fail to find way out of Maheshwar project logjam

Out of ten turbines of projects, three have been installed and are ready to work

Bankers today failed to find the way out of their troubled exposure to stalled Maheshwar Hydel Power Project in Madhya Pradesh but they hinted that they might offer corporate debt restructuring (CDR) package for the project.

This project has been stalled since 1998.

Today Rajiv Takru, financial services secretary and top executives of public sector banks met here to discuss this particular project. Second round of meeting will take place tomorrow.  

Soundara Kumar, deputy managing director, stressed assets management group, State Bank of India said, “no final solution (has been found) and ultimately we may have to go to CDR because I think it is a project which we should try and save.”

She further added that out of the ten turbines of the projects three have been installed and are ready to work.

"The issue is to support it. How do we support without hurting the banks too much and whether the banks can work out a solution on the account” Kumar told reporters after the meeting.  

Beleaguered textile group S Kumar’s which is already facing impending legal actions on group’s others loans, is the promoter of Maheshwar Hydel Project.   

S Kumar’s was unable to bring its share of contribution after the exit of US-based Ogden Energy, which had 49% stake. Most of the lenders to the project have classified the loan as non-performing.

State Bank of India has the exposure of Rs 200 crore to the project and combined exposure of all lenders is to the tune of Rs 2,000 crore according to Kumar.   

This was however the first time that ministry called the meeting to review the lenders exposure to a particular project.  Asked about this, Kumar said, “ministry is interested in the bank (as) banks are owned by the ministry.” 

“In this project PSBs and other public sector bodies have sunk in lot of money and they are owned by government” Kumar added.    

She also said that it’s a part of finance minister P Chidambaram’s initiative to identify and restart stalled infrastructure projects. This (Identifying stalled infrastructure projects) has been going on and three-four meetings have already happened,” Kumar said. Many more projects have been identified according to Kumar.

When asked about the possible solution for the project Kumar said, “banks should help, but in what manner -- whether it is by debt or equity or banks should take some control and put people for management and get it managed through a different entity -- these are the decisions we will have to take now.”

Possible solutions discussed today included getting fresh equity or conversion of debt into equity, after which the banks can go on to restructure the debt, Kumar said.