A State Bank of India (SBI)-led consortium of lenders gave guarantees to debt-ridden Sterling Biotech's Nigerian oil subsidiary, according to a DNA report.
The lenders provided guarantees worth Rs 1,298.1 crore to Sterling Global Oil Resources (SGORPL) in 2015, even after the promoter Sandesara Group was placed under the Reserve Bank of India’s ‘wilful defaulters’ list.
The Enforcement Directorate (ED) is investigating Sterling Biotech's promoters, Nitin Sandsera and Chetan Sandera, under The Fugitive Economic Offenders Act, 2016. Moneycontrol could not independently verify the story.
"The guarantee was given so that the liabilities of the two stressed companies were taken over by the foreign subsidiary, Sterling Oil, which had far better security as the Nigerian oil fields were onshore. It had quality crude, with a low production cost, and, thus, gave the bank better security," the article quoted a source as saying.
SBI provided financial assistance to Sterling Biotech’s Nigerian subsidiary though the country is high on the lender’s high-caution list, the report stated.
RBI noted that the guarantees helped Sterling Biotech raise money from abroad, the report said. The central bank also observed that the round-tripping of the loans might have been undertaken to make the company’s accounts look standard temporarily.
It had asked SBI’s board to review the loan sanction process, the report said. But both RBI and SBI did not pursue the matter further.
The Sterling Group owes Rs 15,600 crore to financial and operational creditors, of which Sterling Biotech owes Rs 7,500 crore while Sterling SEZ has an outstanding of Rs 8,100 crore.
The National Company Law Appellate Tribunal (NCLAT) has stayed the Sterling Biotech’s liquidation process.
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