NCLT approves Gayatri Projects' settlement plan from promoters

The Hyderabad bench of the National Company Law Tribunal (NCLT) has approved a Rs 2400 crore one-time settlement plan (OTS) by promoters of the engineering, procurement and construction company Gayatri Projects, pushing a three-year-old process to resolve the Rs 8100 dues of lenders led by Canara Bank, closer to its climax.

The company, promoted by former Rajya Sabha MP T Subbarami Reddy and his family, has offered to pay Rs 750 crore in fund-based exposure and cover any invocation of bank guarantees by lenders.

"Banks have voted in favour of the promoter settlement with 97% of lenders agreeing to the proposal. Now the NCLT order has put its judicial stamp, the promoters have 90 days to pay up," said a person aware of the details.


Under the repayment plan, lenders are due to receive Rs 750 crore from the promoters, and a further Rs 450 crore are earmarked to be coming from arbitration claims due to the company. The promoters have also promised to make good Rs 45 crore in bank guarantee commissions due to lenders and will provide a cover in case any of the Rs 1100 crore of existing guarantees are invoked.

"The promoters have already deposited Rs 115 crore with lenders. The rest of the cash payments will be made through monetisation of assets and funds arranged from investors," said the person cited above.

Gayatri Projects promoters could not be immediately reached.

Banks had taken about 13 properties of the company as collateral, seven of which will be released to be sold for repayment of loans.

For lenders, this settlement by promoters is the best option currently, though its means only 30% recovery of their Rs 8100 crore dues as they failed to find a buyer for the company in the last three years.

In fact, lenders had voted to liquidate the company after failing to find a buyer after a process that started in November 2022. Canara Bank is the lead lender to the company with 24% of the debt. Bank of Baroda (18%), Punjab National Bank (11%) and IDBI Bank (11%) are the other creditors to the company. Canara Bank did not reply to an email seeking comment.

In its short order, the Hyderabad NCLT has given banks the liberty to revive proceedings in case the conditions of the settlement are not met.

Lenders had moved for liquidation of the company in January 2024, after they received only one offer to take over the company. Subsequently, government bad loan aggregator National Asset Reconstruction Co Ltd (NARCL) offered Rs 474 crore to take over the debt of the company which lenders rejected because it was too low.

The one-time settlement offer from the promoter family came together after almost a one and a half year process and negotiations between banks and the Gayatri Projects.

Besides direct loans, the company had also issued guarantees to distressed projects being executed by the company like Indore Dewas Tollways and subsidiary Sai Maatarini Tollways which also form part of dues to banks, though lower in the financial waterfall. Both these projects have been terminated by the NHAI with arbitration claims pending.

Gayatri Projects has already undergone failed restructuring of loans, first initiated in 2015. Some banks have also sold pledged shares of the company in the open market. The company’s shares have been suspended from trading due to the ongoing insolvency process.