Srei lenders adjust Rs 3,000 crore from SEFL’s cash flows against loan dues, talks still on for debt recast

Lenders to crisis-ridden Srei Group have adjusted around Rs 3,000 crore from Srei Equipment Finance Ltd (SEFL’s) cash flows against the loan dues in the last ten months drawing money from the trust and retention account (TRA), a Srei group spokesperson told Moneycontrol on October 1.

This is when the talks for a debt realignment are still on. Lenders are waiting for the outcome of an ongoing forensic audit to take a call on debt realignment.

“Banks have adjusted Rs 3000 crore from the TRA account against their dues in the last 10 months,” said the group spokesperson. “A sum is also lying in the current account as the Company has been making regular collections. We hope banks will decide on the debt realignment at the earliest so that the Company can pay all its bondholders and other creditors,” the spokesperson said.

Debt burden

The group’s debt is estimated at Rs 28,000 crore. Of this, around Rs 18,000 crore is the exposure of banks and remaining other creditors. Srei Group said it was confident of raising capital after the debt recast.

“We expect the capital to be raised post-realignment of debt with banks. We are confident of raising the capital,” Srei Group said in an email response to Moneycontrol on September 14.

“As soon as we receive the necessary approval of the creditors either on the schemes proposed by us or modified by them, the application for realignment of debt with the honourable tribunal will be taken forward,” the group said.

An RBI special audit team had scrutinised its books in December-January, after which the regulator had asked Srei to shore up its provisions.

Even the prospective investors are waiting for the results of the forensic audit and the RBI’s approval on the fit and proper criteria, the person said. The forensic audit report will be submitted to Srei’s committee of creditors who will assess it for future steps.

Senior exits

There has been a series of senior-level exits from the company in the last six months after the lenders imposed salary caps at Rs 50 lakhs per annum. This includes Srei Infrastructure Finance Chief Executive Officer Rakesh Bhutoria.

Since December, when lenders took control of the finances and capped the salaries of executives, at least 250 of Srei’s 1,500-strong workforce have exited from both the senior and the middle levels.

Sandeep Kumar Lakhotia resigned as company secretary and compliance officer of Srei Infrastructure Finance on March 20. A month later, SREI Equipment Finance chief operating officer Pavan Trivedi quit.

At the same time, the company is striving to get new investors on board. Eleven global investors including Arena Investors, are said to have expressed interest in group company Srei Equipment Finance. Subsequently, the company received non-binding term sheets from Arena Investors and Makara Capital Partners.