Binani Cement debt may be turned into equity

MUMBAI: Lenders to Binani Cement, part of the Braj Binani Group, are planning to convert a total debt of Rs 3,000 crore in the company to equity, said two people with knowledge of the matter. The conversion of debt to equity is being contemplated under the strategic debt restructuring (SDR) guidelines of the Reserve Bank of India (RBI). The consortium of 18 banks led by the Central Bank of India are looking at converting the debt to equity, giving lenders a majority stake. “The banks are contemplating whether they should first try and turn around the company,” a banker told ET.

“We are also looking at another option of a buyer taking over the company where the debt of the company could be serviced as per the schedule.” The bankers had reportedly made a debt-restructuring deal with Binani Cement in June. Banks had even given an additional term loan of Rs 300 crore to the company, said the people cited above.

The lenders are also looking at involving professional management to revive the company. “The lenders could even take over 100% stake in the company which would provide with an opportunity to manage the operations. The (company) had till this quarter (September) and they have not been able to stick with the restructuring schedule,” the banker said. Flagship Binani Industries reported a net loss of Rs 24 lakh in the second quarter ended September, as against a net profit of Rs 6.85 crore in the same period in 2014. According to its website, Binani Cement has four plants, one each in China and Dubai apart from two in Rajasthan. “The company had aggressive expansion plans but the problems started when Indian infrastructure saw a slowdown in growth. The debt has increased in past few years to ahigh level,” a person close to the development said. The company also ran into trouble with revenue authorities and had to fight a legal battle following that.

People close to the development said Binani Cement was also approached by a multinational for an acquisition. “But they (promoters) never came to the table. The buyer was also willing to retain important people in the existing management, but the deal never happened,” said a third person who had approached the company for the deal. It is understood that the banks were aware of the development and could approach the buyer directly. Emails sent to Binani Cement were unanswered. Central Bank of India did not respond to an email.