L&T road project in Gujarat faces insolvency

NEW DELHI: The National Company Law Tribunal (NCLT) has ordered the initiation of insolvency resolution against L&T Halol-Shamlaji Tollway, which had loan repayment defaults of close to Rs 77 crore towards the end of December 2018.

The petition to seek action under the Insolvency & Bankruptcy Code was moved by Oriental Bank of Commerce and will come as an embarrassment for L&T, one of the marquee names in the corporate sector. The road project was being developed by L&T Infrastructure Projects Development Company.

In November,
TOI had reported that lenders had attached an NPA tag to L&T’s Chennai-Tada Tollways but the company had denied loan repayment problems with L&T Halol-Shamlaji Tollway, despite banks complaining about it. The company has maintained that a large part of the problem is due to issues related with government agencies, which confronts most road developers in the country.

NCLT’s Chennai bench has appointed Anil Kumar Birla as the interim resolution professional to oversee the resolution process.

L&T Halol-Shamlaji Tollway had taken the loan in 2009 and the loan had been classified as an NPA in 2016 itself. The company, however, entered into various deals, including conversion of a part of the loan into equity. The lenders had agreed to convert over 40% of the Rs 1,000 crore into equity in February 2017. As part of the restructuring, the interest rate on the loans was also proposed to be reduced to 10% and the repayment period was to be extended.

But Gujarat State Road Development Corporation, which had agreed to fund Rs 210 crore as equity out of the Rs 410 crore debt conversion, failed to do so.

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