Bombay Rayon taken to CDR cell on cash flow problems, debt

Banks that have lent funds to Bombay Rayon are likely to restructure the company's debt of Rs 4,000 crore, reports CNBC-TV18's Gopika Gopakumar.

A consortium of 23 banks led by State Bank of India (SBI) is likely to refer Bombay Rayon to the Corporate Debt Restructuring (CDR) cell soon to restructure the company’s debt of around Rs 4,000 crore. Bombay Rayon has borrowed from SBI, the lead lender, Rs 900 crore -Rs 1,000 crore in loans.

Banks add that the referral to the CDR cell was due to problems in cash flow management at the company. According to the recent earnings declared by the company, the trade receivables jumped by nearly 55 percent to Rs 718 crore and the company’s short-term liability is currently at around Rs 2,100 crore.

On the bourses, the Bombay Rayon stock recovered nearly 20 percent from the day's low.