Eastern Silk gets debt rejig approval

Corporate Debt Restructuring (CDR) Empowered Group

, the apex authority in CDR system, has approved Eastern Silk Industries’ debt restructuring proposal. The Allahabad Bank-led nine-member consortium earlier this month communicated the restructured package of debts under the CDR mechanism, which will be effective from April 1, 2011. After restructuring, the company expects positive cash flow for the company to improve the balance sheet position.

The company’s total bank loan stands at around Rs 430 crores, of which Rs 52 crore is long-term borrowing. The repayment of this long-term loan was to complete in 2014-15. After restructuring, it will be extended till 2020-21. After calculating the savings on interest outgo, the CDR would be formally implemented. Apart from Allahabad Bank, the other lenders of the consortium included Exim Bank, SBI, Federal Bank, UCO Bank and ICICI Bank.

The CDR will require restatement of accounts. During the nine-month period from April 1, 2011 to December 31, 2011, the total interest outgo for Eastern Silk was Rs 18.08 crores. The company reported a net loss of Rs 18.82 crores till December 31 this fiscal against a profit of Rs 88 lakh in the corresponding period last financial year.

As a part of its total restructuring process, the company has downsized its business during this fiscal by eliminating outsourcing in view of fall in export demand. Around 90 per cent of Eastern Silk sales come from exports, mainly to developed markets including Europe.