Lenders refer HCC to CDR, ICICI exposure at Rs 1255 cr

Saikat Das
Moneycontrol.com

Lenders of the engineering and construction firm Hindustan Construction Company (HCC) have referred their total debt of around Rs 7,820 crore to the Corporate Debt Reconstruction (CDR) cell on last Friday (March 16). ICICI Bank and Punjab National Bank are the two largest lenders with exposure of around Rs 1,255 crore and Rs 910 crore respectively, sources familiar with the development told Moneycontrol.com.

There is a consortium of 27 lenders in the CDR filing. In the private sector space, Axis Bank and HDFC Bank too are part of it. While the former has lend around Rs 210 crore, the latter has a relatively less exposure (it could not be traced).

"At the time of (CDR) proposal submission, the account remained as standard assets. Companies have been repaying the interest rate. The proposal is currently under the flash stage, which is the first step of CDR mechanism," said an industry source on condition of anonymity.

In anticipation of defaults (before the principal payment becomes due), bankers have referred the loan account to the CDR cell. As per the Reserve Bank of India (RBI) norms, a bank has to make provision of 2% on any restructuring of standard asset.

A week ago, the company board had approved the HCC management to approach the lenders for CDR mechanism. The absence of expected cash flow arising out of delays in outstanding payments prompted the company to file CDR.

"As a consequence of certain unexpected developments, mainly delays in decision making by the company