Many steel, power companies who were coal mine allotees defaulting on loans

Several steel companies and a few power companies which were allotted coal blocks have made a beeline for corporate debt restructuring (CDR), requesting banks for special dispensation on loans borrowed long before the Supreme Court cancelled the 214 coal blocks.

Companies including Abhishek Industries, Surana Corporation, Damodar Valley, Electrosteel Castings and Electrotherm Industries that were allotted coal blocks have been referred to the CDR cell by banks.

CDR is a restructuring scheme where companies get a long-term extension in loan repayment with moratorium on interest payments.

At present, steel and power companies form a big chunk of companies undergoing CDR process.

Banks are right now considering corporate debt restructuring for Rs 40,783 crore loans taken by iron and steel companies, which form about 16.1% of the total debt of Rs 251,611 crore referred to CDR at end of the first quarter ended June 30, 2014.

Power companies have about Rs 20,253 crore of loans for corporate debt restructuring, about 8.06% of the debt referred to the CDR.

At the end of the quarter ended June 30, banks had outstanding loans of Rs 7 lakh crore of debt either as bad or restructured loans due to stress in repayments of the borrowers. Most of these exposures are to power and the iron and steel sectors.

While some companies like Surana Corporation have not yet got any approval for CDR, Abhishek Industries with a debt of Rs 12,000 crore and five mines was referred to CDR last year, Damodar Valley which was allotted mines was referred to the CDR to restructure about Rs 4,300 crore of debt.

Electrosteel has Rs 6,000 crore debt under CDR and Electrotherm has a debt of Rs 3,200 crore under it. All these companies have been allotted three to six mines.

On the other hand, Bhushan Steel, which also got a few coal block allocations, already have a Rs 40,000 crore of fund based and non-fund based exposure to the banks is already under investigation by the CBI on a bribery case.