Promoters willing to infuse funds into McNally Bharat: Srinivas Singh, managing director

The Khaitan family of Kolkata’s Williamson Magor group is willing to infuse funds into their construction company, McNally Bharat Engineering, even as the company stares at potential bankruptcy after two lenders took it to the National Company Law Tribunal (NCLT), according to a top executive.
“Promoters are willing to infuse funds in the company. We have proposed a resolution plan to bankers in line with Reserve Bank of India guidelines,” Srinivas Singh, managing director at McNally Bharat Engineering, told ET.

Singh said the Khaitan’s had offered to infuse ₹100 crore as equity in the company immediately and have also agreed to pay off the unsustainable portion of the company’s debt over a period of 20 years.

McNally Bharat Engineering has total debt including interest of ₹3,200 crore.

A techno-economic viability study carried out by an external consultant is said to have found that the company could generate enough cash flows to pay off half its debt burden while the other half remains unsustainable.

ET had reported on Wednesday that Bank of India and Canara Bank had filed an application to initiate insolvency proceedings against the company at NCLT.

“The company, as of date, has an order backlog of around ₹600 crore from the earlier period and has secured ₹1,500 crore within last two months. Tenders of around ₹5,000 crore are in the pipeline,” said Singh, explaining why the company could be revived.

Williamson Magor group companies such as cell-maker Eveready Industries and tea producer McLeod Russel have all faced financial strife in the past 18 months. Lenders are threatening to take McLeod Russel into bankruptcy. The Khaitan’s stake in Eveready has slipped below 5% after lenders invoked shares pledged by them in the company.

McNally Bharat is among a long list of construction companies to face the prospect of bankruptcy. However, finding buyers for such companies has been difficult under the NCLT route. At least three such companies—Lanco Infratech, Punj Lloyd and IVRCL—have gone into liquidation after banks took them into insolvency proceedings.