CDR cases not falling; steel, power under stress: Bansal

On Wednesday, brokerage firm Macquarie met with the corporate debt restructuring (CDR) cell to get a brief update on the restructuring pipeline. The Head of the Empowered Group Cell of CDR admitted that stress in the system is not moderating and restructuring proposals are unlikely to ease meaningfully in the near term. 

In an exclusive interview to CNBC-TV18, RK Bansal, chairman, CDR Cell and head, IDBI Bank pointed out that most of the cases are from Steel, Power and EPC companies.

Also Read: Fitch takes rating action on Indian banks Below is the verbatim transcript of RK Bansal's interview on CNBC-TV18 Q: Give us some details on how the restructuring proposals are panning out at this point. How many cases have been referred to CDR in the first two months of the quarter and how bleak is the situation currently?
A: The stress has been going up and we have seen this happening since 2011-2012. Earlier, we got about Rs 20,000 crore worth cases, now, infact last year we got more than Rs 90,000 crore worth cases.
But the point here is two fold. One, the number of cases has gone up. Secondly, each case size is big so it is not only the number that has gone up. In this financial year, in the first quarter we had cases worth about Rs 39,000 crore, the number was about 58-59. In September quarter which is still going on we got about 29 cases and the amount is roughly same about Rs 30,000 crore.
Overall, we are not seeing the reduction immediately. But one thing I can find out from September figures is the number is also not going up Q: Are you getting the sense that this is going to be the peak that you will not see this repeated in the next quarter?
A: I am getting some sense but it is difficult to say and I would tell you why. Most of the cases that we are getting in CDR today are from three sectors, One is steel, engineering, procurement and construction (EPC) contractors and mainly power sector. Steel and power is a combination in most cases.
Some of the delays in coal mines allocation, some of the delays in financial closure, promoter contribution, so that part requires changes in policy which government has already done but they have to come under implementation side. That will reduce. Simultaneously, the equity market has to improve because most of these promoters need some more equity either from private equity or from equity market. Q: In the fourth quarter of last year, the January-March quarter, your incremental CDR cases was about Rs 31,000 crore, April-June quarter it was Rs 39,000 crore and July-September quarter which is still underway- it is Rs 22,000 crore. I agree the third quarter, calendar quarter is less than previous two quarters but do you think you may end up with Rs 30,000 crore plus before September 30?
A: We had last meeting of September so, I know the figure, it is about Rs 30,000 crore. Figures in one quarter go up and down also because of the fact that one big case can come suddenly. Last quarter we had 3-4 big cases, this quarter we had only one big case otherwise all were in the range of Rs 1000 to Rs 2000 crore.

Q: What about the specific companies that are approaching the CDR cell? Some of these big infrastructure companies like GMR, GVK, JP Associates have not yet approached the CDR cell but what is your view on where the concentration is coming from in terms of individual companies?
A: The three groups that you have referred, we have not got in CDR. I do not think as of now there is any plan on their part to come to CDR. It will be wrong on my part to refer to individual cases. Only one group has referred which you are aware but out of these three no one has referred as of now in CDR.