HNG agrees to a ₹2,000-cr debt settlement

The loss-making Hindusthan National Glass & Industries (HNG), has agreed to settle ₹2,006.87 crore dues to banks and financial institutions through a compromise formula. The country’s largest glass maker had been in defaultsince November 2017.

The compromisemeans that the lenders consortium has agreed to take a haircut of approximately ₹500 crore . The company has reported a debt liability of ₹2,524 crore as on March 31, 2018.

The lenders’ consortium includes SBI, EXIM Bank, HDFC, Standard Chartered Bank, Syndicate Bank, DBS Bank, Rabobank, Bank of Baroda, Axis Bank, Edelweiss Asset Reconstruction Co, LIC and L&T Finance. According to a stock market notification, the payment will be made, through cash/equity, within 90 days “from date of conveying approval of the compromise settlement by State Bank of India (SBI) on behalf of consortium”.

The company did not the specify source of funds. When contacted, Mukul Somany, Vice-Chairman and Managing Director, HNG, claimed to have no knowledge of the matter. Company Secretary Vikash Kumar Agarwal remained unavailable.

In June this year, the company offloaded 11 per cent stake in a JV float-glass making company, HNG Float Glass, for an undisclosed price to pare debt.

Shares pledged

The company’s annual report mentions that term loans from banks are secured by way of equitable mortgage and hypothecation of all moveable properties and treasury shares of the company held by HNG Trust and ACE Trust are pledged.

This apart, as an additional security, the promoter and promoter group has pledged 51 per cent of the company’s shareholding banks who agreed to a corrective action plan (CAP). Personal guarantees have also been given by promoter brothers Sanjay and Mukul Somany. HSBC did not agree to the terms and conditions of the CAP and later assigned all the rights, title and interest in financial assistance in favour of Edelweiss Asset Reconstruction Co Ltd.

Networth eroded

HNG has been incurring losses since FY13. As per the auditors report for June 2018 a quarter its networth stood eroded.

As in FY18, HNG’s net loss increased by 150 per cent to ₹285 crore on a consolidated turnover of ₹1,986 crore.

In December 2014, lenders approved a loan restructuring proposal without any positive outcome.

From November 2017 till June 2018, the company defaulted in repayment of about ₹236 crore including principal, interest and penal interest. Letter of Credit to the tune of ₹54 crore also remains unpaid.