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Lenders refuse to recast Websol Energy System’s Rs 350-crore loan

According to reports, a consortium of seven lenders has refused to refer the Kolkata-based Websol Energy System to the corporate debt restructuring (CDR) cell for the recast of its loans worth Rs 350 crore, said people familiar with the matter in the banking industry.

The move assumes significance in light of the repeated warnings by the government and the RBI on the rising incidence of bad loans, prodding banks to act tough on defaulting companies.

“Promoters weren’t ready to bring in their share share of contribution to the scheme,” said a senior official from one of the lenders, requesting anonymity . “They wanted to sell land but it did not happen.”

An email sent to the Websol corporate office followed by phone calls did not elicit any response. Banks had lent to the company in the form of both term credit and working capital loans.

Allahabad Bank  has a total exposure of around Rs 115 crore while Exim Bank lent about Rs 60 crore. The company took mostly working capital loans from private sector lenders , including Axis Bank for about Rs 70 crore, Federal Bank for about Rs 35 crore, Rs 25 crore from ICICI Bank and around Rs 5 crore from HDFC Bank.

Bankers have provided for the default and classified it as substandard loan. During the July-September quarter, Websol extended its net loss to . 1.3 crore from Rs 18.7 lakh a year ago in the same quarter. Websol shares shrank 50% since the last one year, closing at Rs 6.75 on Monday. “These companies cannot make money in India,” said Manish Innani, director of a Mumbai-based brokerage house Prayas Securities .

“Globally, it is almost impossible to run renewable energy companies without government support.” The CDR is a platform where lenders and borrowers mutually draw a scheme of restructuring loans of companies facing financial difficulties. Here, a borrower seeks relaxation of original terms and conditions while lenders restrict their expansion or diversification plans till the company revives.

“We should move away from restructuring ,” KC Chakrabarty, deputy governor of RBI, said two weeks ago at the annual banking conference in Mumbai.

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