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Referrals to CDR are definitely on an upward trajectory with 59 cases
amounting to ~INR500bn being referred in 9mFY12 compared to 31 cases
of ~INR220bn in full year FY10 and 49 cases of INR250bn in FY11. Iron &
steel segment has been a major cause of concern (forming ~27% of
approved restructured debt), followed by infrastructure (12%), textile
(8%), telecom (6.5%) and fertilizer (6%). As of December 31, ’11, 36 cases
amounting to ~INR238bn have been pending to be referred. We expect
restructured pool of assets for banking sector to move up further by
~250bps over next 12‐18 months in a stress case scenario (including SEB
debt) from ~4% as of Q3FY12.
9mFY12 CDR performance data analysis reveals interesting trends
• 25 cases have been referred to CDR in Q3FY12 amounting to INR225bn—this
included Bharati shipyard, 3i Info, Vijai Electricals, ICSA (India), Progressive
Construction and Kemrock Industries. This is over and above 19 cases amounting
to INR230bn in Q2FY12 (including GTL Group ‐ INR168bn, K S Oil ‐ INR26bn and
SBQ Steels) and 16 cases amounting to INR46.8bn in Q1FY12 (refer table 2 for
quarterly movement in CDR referrals).
• Sectoral break up (Refer table 4) suggests that the iron & steel segment has been a
major cause of concern; it currently forms ~27% of the total approved restructured
debt. This is followed by infrastructure (@ 12% of approved restructured debt),
textile (8%), telecom (6.5%) and fertilizer (6%).
• In terms of approvals, 34 CDR cases of INR316bn have been approved in 9mFY12
compared to 27 cases of INR66bn in FY11. Cumulative outstanding CDR approved
cases stand at INR1.4tn (equivalent to 3.3% of bank credit).
Outlook
Interacting with the members of Corporate Debt Restructuring cell throws some
interesting insights:
• Historical trend suggests that 45% of cases that were referred to CDR have
successful been revived. In terms of value, this was equivalent to 85% of CDR debt
being successfully able to meet the obligation.
• Cases coming in for referrals to CDR cell will be on upward trajectory for another 6‐
9 months ‐ as of December 31, ’11, 36 cases amounting to INR 238 bn are pending.
• Increasingly, the stress is being witnessed in power value chain particularly
equipment suppliers like Vijai, ICSA etc due to delays in payment by SEBs. Mid to
small size players in Iron & Steel and textiles are deferring payment obligation
leading to CDR referrals.
• We expect restructured pool of assets for banks to move up further from ~4% as of
Q3FY12 – our analysis across sectors suggest that banking sector will witness
~250bps of incremental addition to restructured book (including SEB debt).
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Referrals to CDR are definitely on an upward trajectory with 59 cases
amounting to ~INR500bn being referred in 9mFY12 compared to 31 cases
of ~INR220bn in full year FY10 and 49 cases of INR250bn in FY11. Iron &
steel segment has been a major cause of concern (forming ~27% of
approved restructured debt), followed by infrastructure (12%), textile
(8%), telecom (6.5%) and fertilizer (6%). As of December 31, ’11, 36 cases
amounting to ~INR238bn have been pending to be referred. We expect
restructured pool of assets for banking sector to move up further by
~250bps over next 12‐18 months in a stress case scenario (including SEB
debt) from ~4% as of Q3FY12.
9mFY12 CDR performance data analysis reveals interesting trends
• 25 cases have been referred to CDR in Q3FY12 amounting to INR225bn—this
included Bharati shipyard, 3i Info, Vijai Electricals, ICSA (India), Progressive
Construction and Kemrock Industries. This is over and above 19 cases amounting
to INR230bn in Q2FY12 (including GTL Group ‐ INR168bn, K S Oil ‐ INR26bn and
SBQ Steels) and 16 cases amounting to INR46.8bn in Q1FY12 (refer table 2 for
quarterly movement in CDR referrals).
• Sectoral break up (Refer table 4) suggests that the iron & steel segment has been a
major cause of concern; it currently forms ~27% of the total approved restructured
debt. This is followed by infrastructure (@ 12% of approved restructured debt),
textile (8%), telecom (6.5%) and fertilizer (6%).
• In terms of approvals, 34 CDR cases of INR316bn have been approved in 9mFY12
compared to 27 cases of INR66bn in FY11. Cumulative outstanding CDR approved
cases stand at INR1.4tn (equivalent to 3.3% of bank credit).
Outlook
Interacting with the members of Corporate Debt Restructuring cell throws some
interesting insights:
• Historical trend suggests that 45% of cases that were referred to CDR have
successful been revived. In terms of value, this was equivalent to 85% of CDR debt
being successfully able to meet the obligation.
• Cases coming in for referrals to CDR cell will be on upward trajectory for another 6‐
9 months ‐ as of December 31, ’11, 36 cases amounting to INR 238 bn are pending.
• Increasingly, the stress is being witnessed in power value chain particularly
equipment suppliers like Vijai, ICSA etc due to delays in payment by SEBs. Mid to
small size players in Iron & Steel and textiles are deferring payment obligation
leading to CDR referrals.
• We expect restructured pool of assets for banks to move up further from ~4% as of
Q3FY12 – our analysis across sectors suggest that banking sector will witness
~250bps of incremental addition to restructured book (including SEB debt).
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