SBI Pushes For Jyoti Structures Takeover By Amin, Dubai

SBI is pushing creditors of Jyoti Structures to accept a takeover proposal from Amin Group of Dubai, in spite of knowing about a past working relationship between promoters of the 2 companies.At a creditors’ meeting on August 22, SBI, the lead lender in the Rs.3,000-cr loan consortium, asked other lenders to agree to the stake sale proposal and divest majority ownership to Amin Group under the SDR – strategic debt restructuring norms invoked at Jyoti Structures in August last year.In a statement to the stock exchanges on July 11, Jyoti Structures Limited disclosed that the lenders had decided to call for expressions of interest to purchase it, from potential buyers outside of the strategic debt restructuring mechanism.The final proposal by Amin Group prescribed a 50-55 per cent haircut for lenders, and SBI is keen on approving it. Even while the issue of a past working relationship between the promoters was pulled up, they just said it should be put on record, but the deal shouldn’t stop from going through.SBI’s decision to push through the sale comes against the backdrop of a cautionary by RBI to lenders to rightly audit buyers in SDR cases. Ever since their merger talks have begun, the SBI group has turned quite aggressive at JLFs – joint lender forums, since all associate banks are in agreement with the main bank’s decision. In this way, they are able to push through decisions.Meanwhile, SBI share price was trading 1.18 per cent higher at Rs.249.50 on NSE today.If the sale is approved by the lending consortium, Jyoti Structures Ltd would be joining Gammon India and Lanco Infratech, which creditors agreed upon to sell to Bilav Software and OPG Power Ventures, respectively.As long as the lenders are satisfied that a past relationship is of an honest nature and not with malpractices, approving such buyers would not be an issue. In fact, it might work in favor of the deal since the buyer is aware of the internal workings of the company. Recovery and restoration of the company should be the very first focus of such deals.At the end of the month of June, Indian banks were sitting on Rs 6.3 trillion of bad loans, the legacy of an economic downswing, conjugated with regulatory delays and troubles in completing land acquisition which stranded various ambitious industrial projects and made it a problem for their promoters to repay debt.

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