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Srei Infra company secy resigns; 180 exits since Dec after salary caps

Equipment finance NBFC Srei Infrastructure Finance Ltd on Saturday said its company secretary Sandeep Kumar Lakhotia has resigned

Srei Infra company secy resigns; 180 exits since Dec after salary caps

Press Trust of India New Delhi
Equipment finance NBFC Srei Infrastructure Finance Ltd on Saturday said its company secretary Sandeep Kumar Lakhotia has resigned.
The move comes following the salary cap imposed on the company by its lenders amidst pandemic-induced stress on its business.
The company, when contacted, said around 180 employees have exited since December last year.
"We wish to inform you that Sandeep Kumar Lakhotia, Company Secretary of the company has resigned from the position of Company Secretary & Compliance Officer of the company," Srei Infrastructure Finance Ltd said in a regulatory filing.
Lakhotia will be relieved with effect from the close of working hours of 20th March, 2021, Srei said.
"The company shall be shortly appointing a new Company Secretary & Compliance Officer and the same shall be intimated to the Stock Exchanges in due course," it said.
In the interim, Ekta Agarwal, Deputy Company Secretary of the company shall be in charge of the compliance function, it added.
The company is battling asset-liability mismatch in the aftermath of the pandemic-driven stress in the economy as it mainly caters to equipment financing and most of the economic activities came to a grinding halt due to the lockdown, only limping back gradually now.
A bulk of the borrowers of the company are finding it difficult to repay loans taken from the company.
"The banks have capped the salaries of the senior-level executives of the company at Rs 50 lakh per annum as a result of which salaries at the very senior level have halved or become one-fourth.
"At junior level also there have been exits as the banks have taken control of the cash flow and pre-authorising every payment, which essentially means the company has to take permission from its lenders for every expense it incurs and that is causing delay in payment of salaries," said sources privy to the development on the condition of anonymity.
This is despite the company's senior management taking up to 30 per cent reduction in salaries since March 2020. Sources indicated that salary caps and employee exits are impacting the company's operations, including its recovery efforts.
However, it is learnt that some of the lenders are reconsidering the conditions such as putting a cap on salary and pre-authorisation of expenses on the back of the mass exodus kind of situation in the company.
Senior bankers have been in discussion with the company to create a more effective path to normalcy of operations, which will aid in recoveries from customers, sources said.
However, a decision is still awaited.
Kolkata-headquartered Srei group owns nearly Rs 18,000 crore to as many as 15 lenders including SBI, Axis Bank, UCO Bank and Axis Bank.
Srei Infrastructure Finance posted a huge consolidated net loss of Rs 3,810 crore during the third quarter of the current fiscal on account of higher and accelerated provisioning as a prudent measure.
The company's total consolidated provisioning was at Rs 3,100 crore for the period under review and the net worth stood at Rs 296 crore.
Srei has said that the COVID-19 pandemic had impacted its recovery, leading to asset-liability mismatch.
The company has had a number of discussions with the lenders to find out a solution to the present crisis so far. However, nothing has materialised as of now, as per sources.
Earlier this month, CARE Ratings downgraded the rating assigned to Srei Infra's long term and short term bank facilities as well other bonds to 'CARE D', which the company termed as "blatantly wrong, misleading and baseless".
Also, Srei Infra in November 2020 had informed about a special audit of the company and its subsidiary, Srei Equipment Finance Ltd, which was undertaken by an auditor appointed by the Reserve Bank of India. The audit has been concluded.
The company, in the response, also reiterated that it has been in the business for over three decades with an impeccable track record. Over the last 31 years, Srei has paid more than Rs 30,000 crore as interest to banks and nearly Rs 20,000 crore as principal, always on time, it said in an email response.
"Following the outbreak of COVID-19, Srei Equipment Finance Limited had anticipated a situation where its customers' cash flows were likely to get adversely affected and hence had pro-actively approached the NCLT with a scheme that proposed repayment of loans to all the creditors in an orderly manner over a period of time.
"This is one of the rare instances of a company pro-actively proposing realignment of loan repayments anticipating stress in the sector in which it operates," Srei said.
The proposal encompasses any changes/modifications that creditors may want to have for an orderly repayment of the liabilities over a period of time, it added.
"We are currently in the midst of a dialogue with our creditors for an orderly realignment of payments, synchronized with our collections," it said further.
The company's consolidated assets under management are around Rs 43,000 crore.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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First Published: Mar 20 2021 | 9:54 PM IST

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