Banking News

PSU lenders divided over debt resolution of Simbhaoli Sugars

New Delhi: Public sector banks are divided over the debt resolution of Simbhaoli Sugars, a company co-promoted by Gurpal Singh, the son-in-law of former Punjab chief minister Amarinder Singh, and have so far failed to agree on a one-time settlement (OTS) offer that could address the company’s ₹1,436-crore debt burden, banking sources said.

While Punjab National Bank (PNB) and Bank of India (BoI) are willing to move ahead with the OTS proposed by the promoters, State Bank of India (SBI) is opposing the move, as per sources.

SBI wants the promoters to sweeten their offer of ₹330 crore for the company and also wants commitments on timelines for payments before it comes to the negotiating table, according to sources privy to its thinking. Else, it will consider pushing ahead with an insolvency lawsuit it had filed against the company last year.

ET had first reported about the lawsuit in August 2022.

PNB and Bank of India together have a nearly 60% voting share in the committee of creditors of the company. They are of the view that insolvency should be avoided at all costs as the lenders will get even lower recoveries and maximum proceeds would be paid out to cane farmers.

ET Bureau

Moreover, bankers favouring the settlement have argued that the principal amount they have loaned is less than ₹800 crore and the settlement on offer should be benchmarked against the principal amount loaned.

The ₹1,436-crore debt burden of the company includes interest and penalties levied over several years.

SBI is designated as the consortium leader in loan agreements and calls the shots. Emailed queries sent to SBI, Punjab National Bank, Bank of India and Simbhaoli Sugars on Wednesday remained unanswered until the publication of this report.

Gurpal Singh, who owns below 10% stake in the company, has applied to the Securities and Exchange Board of India (Sebi) for declassification of his promoter status.

Simbhaoli Sugars’ operations are helmed by Gursimran Kaur Mann.

Simbhaoli Sugars is listed and has manufacturing units at Simbhaoli, a village in Uttar Pradesh’s Hapur district.

The company also has an ethanol manufacturing business. It established its first sugar mill in 1933 and has a turnover of around ₹2,000 crore.

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