00:00 BGR Energy System
00:01 Now the company has defaulted on the working capital loans worth 631 crore rupees.
00:06 The banking editor Vishwanath Nair joins us with more on this.
00:09 Vishy, what does this mean for the company and its lenders from now on?
00:12 Right, Prakriti. So as you noted there's a 631 crore default.
00:18 Now this default is on working capital outstanding.
00:21 That is from three banks ICICI Bank, Indian Bank as well as Bank of India.
00:26 What the company has said is that this default happened sometime in October and November
00:30 and this is now part of a long list of defaults that the company has been reporting to the
00:37 exchanges. In fact, earlier this month it said that State Bank of India which is one of its
00:42 largest lenders and where the company owes over 2000 crore, that bank has actually recalled the
00:48 entire outstanding amount because this is part of the Reserve Bank of India's divergent account list.
00:55 That's where the company stands at. Essentially, a divergent account is an account where the RBI
01:00 believes that there's a default but the bank has been recording the account as a standard account.
01:04 So that's why now multiple banks have come out with a notice to the company saying that they
01:09 need to repay their outstanding debt at the earliest possible period. Now what this means
01:14 for the company essentially since all of the debt is coming up to repayment, the company owes about
01:19 Rs.4688 odd crore in terms of outstanding debt of which about Rs.4300 crore is towards the banks
01:27 and other financial institutions. So that amount will need to be repaid. Of course, the company
01:31 has been reporting losses consistently for the last two to three years. It is also in trouble
01:37 with the Tamil Nadu State Government for delays in implementing a power project that was assigned
01:43 to it. So therefore, that becomes slightly more difficult for the company to manage its expenses
01:49 as well as repay its debt on time and for the banks, of course, it's an issue because they
01:53 need to ensure that the recovery is happening on time.
01:56 [Music]
