Lenders going after Gayatri Projects due to default but punters going for the kill

Gayatri Projects Ltd, a small-sized infrastructure company that takes up civil construction projects such as roads, irrigation and dams, has been facing heat from lenders over its debt pile and missed debt covenants.

Last week, Canara Bank, a member of the consortium of lenders, initiated a Corporate Insolvency Resolution Process against the company under the Insolvency and Bankruptcy Code 2016 for a default of Rs 1,520.75 crore.

This is in addition to the application filed by Bank of Baroda, the lead banker of the consortium, against the company earlier.

Some lenders have invoked the right to sell the company's pledged shares due to the default and the promoter holding has shrunk to around 38-39%.

The company’s share price hit an upper circuit on Tuesday, rising 20% to Rs 9.84 apiece.

Gayatri Projects had seen its topline shoot up to over Rs 3,900 crore in the middle of the pandemic for the year ended March 31, 2021, though it sank into the red that year. The following year, revenue shrank by almost a fifth to Rs 3,100 crore but the company was in deep pain with net loss nearing Rs 1,000 crore.

This was partly due to lower revenues coupled with a rise in input costs while finance costs, or interest payments on outstanding debt, stayed above Rs 300 crore for the third straight year.

The situation has only deteriorated since March. In the first quarter ended June 30, revenues were down by two-thirds to Rs 282 crore while net loss was pegged at Rs 391 crore against a net profit of Rs 23 crore in the year-ago period.

The company has lost over 80% of its value in the last one year and over 95% of its value since the peak four years ago.