After taking haircut, SBI to invest in defaulter Supreme Infrastructure

After the approval of debt restructuring plan, creditors’ outstanding debt has come down from Rs 2,200 crore to Rs 464 crore, leading to a haircut of 79 per cent. Haircut in banking parlance is the loss suffered by the creditors when the current realisable value of the asset/ loan declines from the original loan value. SBI has an outstanding debt of Rs 1,023 crore in SIIL.

Banks, including SBI, had burnt their fingers in several such equity investments in defaulted companies. In the case of defunct Kingfisher Air loans, banks that converted the debt into capital at a price of Rs 65 per share made losses as the company collapsed and its shares are no longer traded on the exchanges. Many banks were treading cautious in the wake of the arrests of bank officials involved in the Kingfisher wilful default case.

When asked about the debt conversion plan and haircut, SBI and SIIL did not respond to the mails from The Indian Express.

Banks have taken a haircut when the restructuring proposal of the company was approved by the financial creditors. “The total outstanding debt to financial creditors, which was Rs 2,200.36 crore, has been reduced to Rs 464 crore as the settlement amount. The company is now under process with NCLT to obtain final approval,” SIIL said in a statement in July this year.

It had secured a majority vote from its financial creditors on the ‘Composite Scheme of Compromise and Arrangement’, with 92 per cent of the votes in favour, the company said.

According to the Annual Report of SIIL for the FY2023, SBI had an exposure of Rs 1,023 crore, Union Bank Rs 238 crore, PNB Rs 296 crore, Bank of India Rs 148 crore, Central Bank of India Rs 115 crore, Canara Bank Rs 197 crore, ICICI Bank Rs 122 crore and SREI Rs 130 crore.

“Banks should be trying for recovery of loans stuck in the company. They have already taken a haircut of 79 per cent,” said a former banker involved in bankruptcy cases.

The company made a loss of Rs 953.54 crore and a revenue of Rs 81.45 crore in FY2023. In the December quarter of FY24, it made a loss of Rs 292.34 crore and a revenue of Rs 8.70 crore.

Incorporated in 1983 under Indian Companies Act 1956 as Supreme Asphalts Private Ltd by Bhawani Shankar Sharma along with other promoters, the company got listed as a public limited company by the name Supreme Infrastructure India Ltd in 2007. The company has been actively engaged in government contract works with clients under various verticals like roads, bridges, buildings, railways, electrification, water and drainage.