Guggenheim-held Infra India Plc says no sustainable plan for completion of Shree Maheshwar Hydel Power Corp's 400 mw project or detailed financial projections have been provided
Even as regulators are keen to settle high profile cases of non-performing assets (NPAs) through insolvency procedure within a strict deadline, settlement of small accounts like that of Shree Maheshwar Hydel Power Corp continues to suffer delays drawing the ire of its foreign investor, London-based Infrastructure India plc.
"Despite repeated requests to the new company management appointed by the lenders, no sustainable plan for completion of the project or detailed financial projections have been provided," the London Stock Exchange-listed fund recently told its shareholders.
Shree Maheshwar, initially promoted by Mukul Kasliwal-headed Entegra Ltd, has been setting up a 400 megawatt (mw) hydropower project on Narmada river in Madhya Pradesh.
Infra India holds 20.5% stake in the project and has pumped in £29.7 million in tranches since 2008, an investment which has lost close to two-third of its value, worth £10 million now.
With a debt burden of Rs 2,200 crore, lead lender Power Finance Corp (PFC) had filed a case of mismanagement and oppression by the management in 2016.
"In June, NCLT (National Company Law Tribunal) rejected the claims of oppression and mismanagement and questioned the validity of the invocation of a pledge of promoter shares. PFC has challenged the verdict," the fund has disclosed.
In March 2017, the lenders along with Guggenheim Global Infrastructure Co, the holding company of Infra India Plc, took control of the assets.
"The lenders wish to invest Rs 600 crore to revive the project, followed by significant additional debt, resulting in a revised project cost of over Rs 8,000 crore. Our analysis indicates that it will be necessary for the lenders to substantially restructure the debt in order to make the project viable," the fund said.
There are other foreign investors too who have burnt their fingers investing in India's infrastructure sector.
Another UK-based fund, Eredene Capital, failed to find a buyer in 2015 for its 50% stake in Apeejay Infra Logistics after suffering significant value erosion and has sold back the stake to partner Apeejay Shipping.
Both Eredene, as well as Infra India, have been scaling down their investments in the sector gradually, selling off most of their investments at a loss and returning to the investors whatever salvage value they could get.
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