THIRUVANANTHAPURAM: Kerala State Electricity Board Ltd (KSEBL) appears to be on a borrowing spree with the latest loan for an amount of Rs1,000 crore to be secured from Housing & Urban Development Corporation Ltd (HUDCO).
The financials of KSEBL, the sole power distributor in the state, are said to be in shambles with its negative net worth mounting to a whopping Rs34,000 crore and the total borrowings have already exceeded Rs17,000 crore as of September 30.
KSEBL’s loan book might soon grow to Rs20,000 crore as the company still struggles to earn profits.
KSEBL, which recently announced yet another tariff hike, has approached HUDCO for a special term loan assistance to meet the company’s operational requirement including purchase of power, according to an informed source.
REC loan
During the past one month or so, KSEBL has also secured a short term loan of Rs500 crore from REC Ltd at an interest rate of 8.99 per cent and another term loan facility of Rs75 crore from Dhanalaxmi Bank Ltd.
The HUDCO loan was, though initially sanctioned at an interest rate of 10.45 per cent, the interest rate was later revised to 9 per cent after negotiations between the two.
Moratorium
HUDCO has consented for a moratorium period of 12 months as part of the terms of the loan agreement. As per the conditions laid out for the loan by HUDCO, KSEBL has to hypothecate assets to the extent of 110 per cent security coverage on the first charge basis.
Over and above that, KSEBL will be required to maintain 125 per cent of HUDCO repayment requirement as Escrow cover on an ongoing basis.
The tenure of the loan will be 60 months or five years including the 12 months moratorium. HUDCO has furnished a couple of strict terms for the disbursal of the loan.
Terms
HUDCO has stated that this loan should not be utilised for the re-financing of any existing loans availed by KSEB from any other lenders.
Moreover, this loan cannot be subject to restructuring under any financial restructuring plan to be prepared or adopted by KSEBL during the tenure of the loan and the loan can only be used for the purpose of company’s operations.
Though KSEBL has availed substantial amount of loans from private lenders, it has relied more on government-related agencies for its financing purposes in the recent times.
Already KSEBL has loans to the tune of Rs868 crore from Kerala Financial Corporation (KFC). Apart from the new Rs1000 crore secured from HUDCO, KSEBL has signed up for Rs500 crore with REC Ltd last month as mentioned earlier.
