India: Burnpur Cement blames demonetisation for repayment failures

Burnpur Cement has declared its inability to repay bank loans on Saturday due to demonetisation as its repayments had turned “irregular” with lenders because of “depressed” market conditions.

Located in eastern India, Burnpur Cement is looking to raise its production capacity from 0.6Mta to 3Mta, split between two units, at a cost of INR5000m (US$73.3m). The company made a regulatory filing at the weekend and said it had fallen behind on repayments because its cash flow was impacted by demonetisation.

Demand has fallen 35-40 per cent, Ashok Gutgutia, Burnpur Cement’s vice-chairman and managing director, said in a phone interview. The price of a 50kg cement bag has also fallen by INR15-20, he said, adding both revenue and profits have been impacted. "The matter is under discussion with lenders and the lead bank is positive on suitable restructuring," Burnpur Cement said in its regulatory filing. "Other banks are in the process to follow the decision of (lenders') consortium."

Burnpur Cement Ltdreported a revenue of INR880m (US$12.9m) and a net loss of INR127m (US$1.8m) in 2015-16, had long-term borrowings of INR2020m (US$32.2m) as of 31 March.