Allahabad Bank would be put on the block loans worth Rs 101 crore to Khaitan Electricals on its books as part of the NPA package it aims sell now
Khaitan Electricals, once popular for its fans and other household electrical products, has gone bust.
The Kolkata-based firm has turned into a non-performing asset (NPA) for its lenders in the second quarter, and with little chance of recovering the money, Allahabad Bank has even decided to sell the dud loan, documents available with DNA Money show.
Allahabad Bank would be put on the block loans worth Rs 101 crore to Khaitan Electricals on its books as part of the NPA package it aims sell now.
Usually, an account is classified as a non-performing asset (NPA) when loan payments are not made for a period of 90 days.
The bankers had invoked strategic debt restructuring exercise last year after the company's continued losses. The account has turned into an NPA as the company's earlier attempts to diversify into areas like lighting failed while its core consumer durables brand suffered due to intense competition.
Besides Allahabad Bank, some of its other lenders have also recognised the account as a non-performing asset, as indicated by the company in its second quarter result.
Other lenders - State Bank of India, IDBI Bank and Indian Bank - have an aggregate exposure of Rs 330 crore to the firm.
"Company has not provided for bank interest from the month of July 2017, since the same has been declared as an NPA by the banks. Had this interest been provided, there would have been an increase in the loss amounting to Rs 1,268.47 lakh," auditors have said in the second quarter result.
Promoted in 1975 by S K Khaitan and Jyoti Prakash Tibrewala, the company's woes have only increased in recent times with significant drop in revenues.
In the second quarter of this fiscal, sales dropped to Rs 9.58 crore from Rs 16.41 crore in the year-ago period. They were at Rs 19.60 crore in the first quarter of this financial year.
Considering interest costs of just Rs 63 lakh in the second quarter against Rs 11 crore in the preceding quarter, loss in the July-September period stands at Rs 13.79 crore.
"Since 2014–15 onwards, company has incurred loss... The reasons for non-performance and incurrence of such high loss was mainly due to high cost of overhead per unit due to lower volumes, higher interest expenses due to increase in current assets and inadequate internal accruals, entry into appliances, resulting into high stock pile-up, tough competition in domestic and international market and sluggish economic conditions," the company said in its annual report for FY17.