Gayatri Projects creditors submits claims of Rs 7,947 crore

Creditors of Gayatri Projects have submitted claims of Rs 7,947 crore as the corporate insolvency resolution process gets underway. The Interim Resolution Professional — Sai Ramesh Kanuparthi – has so far admitted claims of Rs 5,926 crore, while claims worth Rs 3,442 crore are being verified.

Of total claims received by the IRP, Rs 7,500 crore claims have been received from secured (Rs 6,956 crore) and unsecured creditors (Rs 638 crore).  So far Rs 5,900 crore worth of claims of financial creditors have been admitted by the IRP.

Among the secured creditors, the biggest claim has come from Canara Bank (Rs 1,910 crore) followed by Bank of Baroda (1,382 crore) and IDBI Bank (Rs 1,016 crore)

Operational creditors have submitted claims worth Rs 333 crore.

Hyderabad-based Gayatri Projects was dragged to insolvency court by State Bank of India (SBI) after the former defaulted on a payment of Rs 242 crore. The Hyderabad bench of the NCLT admitted SBI’s insolvency application through an order passed on 15 November 2022.

Brief of the case

State Bank of India along with consortium of lenders on the request of Gayatri Projects has sanctioned term loans including short term loans, equipment loans, demand loan, ECB loan and working capital facilities, both fund based and non-fund based for the purpose and the terms and conditions contained in various loan agreements / facility agreements entered into between the Gayatri Projects and SBI and other lenders.

Further, in order to secure such facilities, Gayatri Projects had from time-to-time, created security by way of hypothecation of its movable assets, book-debts etc. SBI has specifically had sanctioned fund based working capital facility of Rs 50 crores and the Corporate Debtor has executed Agreement of Loan for overall limits with the Applicant in furtherance of the same.  

SBI in its insolvency petition has said that the working of Gayatri Projects operating divisions came under strain and in the year 2014, the lenders identified incipient stress and categorized the account of the Corporate Debtor as SMA-2.

In order to overcome difficulties faced, the Corporate Debtor had requested the lenders including SBI for carrying out debt restructuring. Thereafter, the restructuring package was approved by the Joint Lenders Forum on 19 January 2015. In furtherance of the said package, SBI also sanctioned the said restructured facilities to Gayatri Projects, which executed Master Restructuring Agreement dated 23 January 2015.

At the time of signing the restructuring plan, the outstanding loan was Rs 422 crore, while the restructured amount was Rs 50 crore.

The account of Corporate Debtor was declared as Non-Performing Asset (NPA) on 30 April 2022.

About Gayatri Projects

Gayatri Projects is an EPC and construction company with presence majorly in road construction. Gayatri Projects posted revenue of Rs 3102.34 crore in FY2022 as against Rs 3900 crore in the previous year on a standalone basis. The revenue from operations has declined by 20.46% in FY2022 when compared to the last year due to working capital stress on account of Covid pandemic, countrywide lockdown and delay in receivables from the State Government Departments.

The company incurred losses of Rs 788 crore before exceptional items/taxes In 2021-22 as against profit of Rs 51.22 crore in the previous year. The main reasons for incurring the losses are on account of increase in materials cost, increase in cost of overheads, non-availability of adequate working capital to execute the works on hand, non-awarding of fresh contract works due to lenders reluctant to provide bank guarantee etc., have severely affected the business operations of the company.

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