Need to ensure infra projs' viability for restructuring:SBI

A: It will definitely be a relief. We were wanting it for existing projects, that has been permitted. So, this will enable us to better match the cash flows with the repayments. So, to that extent it is definitely a relief. The fact that it has been for infrastructure and coal sector that is how it was even in the earlier circular. So, to that extent that is really no surprise. Regarding projects that have not yet achieved commercial operations, once they do achieve commercial operations may be we can bring them under this provision. The only problem is with projects that are stuck, there is a Reserve Bank of India (RBI) circular of August 2014 where they had said financing of cost overruns more than 10 percent will render the project as restructured. That is something that we have been again requesting the RBI that they need to relax because 10 percent is an arbitrary number and quite often the cost overruns are on account of time overruns or on account of late approvals received or land acquisition issues etc. So, some amount of relief has been granted and that is welcome.

Q: But as you said that for projects which are already stuck some of the other roads like the 10 percent cost overrun that have not yet been simplified can you give us a sense? When we are talking about core sector infrastructure projects whether it is power or cement or steel or any of the core sector projects to what extent even if there is a rough ratio to understand what percent of these projects might actually find easier refinancing with these norms now?

A: It is very difficult for me to say what percent because as you can understand there are a number of things over there that has to actually be looked at. We have to look at maintaining net present value (NPV). So, that would mean that either we would need to raise interest rates or more equity will have to be bought upfront. So, we will have to see how that is to be handled. Secondly we need to ensure the viability and again that has to be rechecked by the evaluation committee.

So all of these checks and balances are there and therefore we need to go through all of these in order to ensure that we get these projects refinanced but to give you a number straight away we ideally don’t have it ready, so I won’t be able to give that.

Q: Would these norms at all have a bearing on current ratios? Perhaps projects which were running into little bit of rough weather, projects which have already been commissioned but who are running into some kind of financial rough weather now have a new window thanks to the new norms. Will it have at all a bearing on the financials in the coming quarters in terms of the overall restructuring that banks are reporting including State Bank of India?

A: Again very difficult to say because the coming quarter means we are looking at December quarter it is only 15 days left. So, I don’t see how it is going to impact anything during this quarter. If at all something might come in it will be in the next quarter. We will have to see how it is looked at. Basically we would like to think this is refinancing rather than restructuring. So, we need to look at it from that light.