Shock to Shrey Infra, CEO Rakesh Bhutoria resigns

The pandemic-induced lockdown severely hit the finances of the Kolkata-based NBFC, leading to asset-liability mismatch.

Subsequently, the company’s lenders took control of its finances to recover its dues, triggering massive withdrawals at the Srei Group, as salary delays became a routine, and remuneration of top-level executives limited. been done. ₹50 lakhs per year. The salary limit was removed in April this year. “CEO Rakesh Kumar Bhutoria has resigned from Shreya (SIFL). These top level employees are now exploring the option of taking legal recourse to clear their salary arrears, which is held by the banks at TRA (Trust End). Retention Account),” according to sources privy to the development.

Even though Bhutoria’s last working day is yet to be decided, sources said the company has appointed a headhunter to find a suitable candidate for the new CEO.

According to sources, “Headhunter has shortlisted a list of potential candidates, and they have also met with the company’s board as part of the interview process.”

A source said the lack of decision-making by lenders in clearing salary arrears has resulted in loss of professional talent, which eventually leads to top-level exits, as they feel demotivated.

The chief operating officer (COO) of the company’s wholly-owned subsidiary Srei Equipment Finance Limited (SEFL) had stepped down in April. The company secretaries of SIFL and SEFL had resigned in March and May respectively.

“Recently, the Head of Treasury and Head of Corporate Communications have also gone,” said sources, adding that around 230-250 employees of Srei Group have resigned since December 2020. There have also been regular delays in payment of salaries and other statutory payments. Ever since the banks acted, he said.

When contacted, Bhutoria neither denied nor confirmed his resignation.

On arrears related to salary, he said that the employees are not left with any other option.

Bhutoria is hopeful that the matter will be resolved soon.”

“Even though an understanding has been reached with the banks to release the salary arrears, nothing has actually happened on the ground. About a dozen senior officers have not been paid their dues even after the salary cap was removed in April. ₹3 crores,” as per sources.

He said Shrey and its board have written to banks several times for release of dues and overdue payment of provident fund and taxes.

Another person with knowledge of the matter said, “At the behest of the board, Srei has also informed the regulator (RBI) about his grievances. They are now exploring the possibility of taking legal recourse to clear the dues of the employees.” are.”

credit is due ₹18,000 crore to around 15 lenders including Axis Bank, UCO Bank and State Bank of India.

Srei did not comment on Bhutoria’s resignation. However, the company stated that the total liabilities of the company are approx. ₹18,000 crore bank loan, and others approx. ₹10,000 crore foreign commercial borrowings and bonds. Realizable assets, including arbitration awards, are high. “Therefore, we believe we can pay all of our creditors over a period of time if structured in line with cash flows. Additionally, the company’s business model is sustainable, and we serve one of the most important segments of the Indian economy – MSMEs and infrastructure. “As a concern, SEFL looks forward to receiving necessary support and guidance from the regulator and other stakeholders,” said a company spokesperson. The NBFC manages close ₹40,000 crore assets. It is facing difficulties in recovering money from its borrowers, who mostly own construction equipment and are also affected by the pandemic.

“In order to pay back our lenders in a structured and systematic manner, the Company submitted a plan in October 2020 to banks and financial institutions to pay back principal and interest over time. The Company has proposed to revise the repayment schedule. option to be offered by the creditors,” the company added.

On the capital raising front, the board of directors of Srei Infra (SIFL) had approved a proposal in July. ₹2,500 crore through various channels including Qualified Institutional Placement (QIP).

Earlier, subsidiary SEFL attracted total investment proposals ₹4,200 crore from private equity firms in the US and Singapore.

Sources said Arena Capital (US) and Capricorn Capital (Singapore) are awaiting approval of suitable and appropriate norms from the Reserve Bank of India (RBI).

Srei Infra reports consolidated net loss of ₹971.05 crore in the quarter ended June 2021. In 2020-21, it had recorded a record loss of ₹7,338 crore as against net profit of ₹89 crore in the last financial year.

Srei had transferred its business to SEFL at the end of 2019 through bearish exchanges through a business transfer agreement, in lieu of fully paid-up equity shares to SIFL.