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The total receivables for Bartronics stand at Rs 880 crore for the quarter ended December 31, 2012. The company also faces winding up petition in court from a creditor. There has been slight easing in the last 30 days although not significant, Rao says.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: Can you update us on the receivables position? The last we heard was that Rs 880 crore due from your customers and the company facing a winding up petition from one of your creditors in the Andhra Pradesh High Court. What's the update?
A: I would like to address these points one by one. First, it is true that the overall receivable figures have reached at alarming stage. We have been constantly telling our shareholders, telling the other stakeholders that we are trying to grapple with this problem and trying to bring it under control. We have taken quite a few steps which we had earlier shared in the public domain. A slightly easing happened in the last 30 days but it is not a significant improvement that has been achieved beyond the position we had achieved at the end of the last quarter. That is as far receivables are concerned
As far as the winding up charges are concerned, I think lately there have been quite a few rumours which have been floating around. One rumour is that there is a winding up petition against the company. The clarification is that if we really go back and look at the annual reports of the last two years, we have mentioned and the auditors have also commented that we are in a legal battle with couple of lenders in terms of their dues from the companies.
The total amount involved is hardly about Rs 4 crore but since the issue is already in court, one of the lenders has taken the call of going ahead and filing a winding up petition. These are issues which need to be addressed at a different level. However, just to clarify, the total amount involved is probably four crore and it is being fought on a legal platform.
Q: You spoke about the company facing a liquidity shortages and pressure on the back of very high receivables. What kind of an impact will that have? Do you have more lenders to which you owe money? What happens to your FCCBs? You are close to about Rs 270 crore of FCCB redemptions which are also due. Is there a likelihood of perhaps defaulting on the back of less liquidity?
A: As far as liquidity is concerned, what I meant to convey is that there is a pressure on operations. It is not a question of whether we are able to pay the vendors the earlier payments that are due from the company or not? That's not the issue. The issue is how we will manage on a day-to-day basis, running the company's existing orders and fulfilling the customer requirements.
We are sitting on orders from more than 23 public sector banks for implementing financial inclusion across almost 60,000 villages in the country. This kind of an operation is a very cash hungry and it is not that these payments are not secure. In fact, we are receiving money from all our banking customers promptly and that ensures that this cycle continues. Having said that, if we are not able to address the liquidity issue quickly then the growth from the current level of implementation to what it is desired by the banks is going to be slower than anticipated. That is what I meant by liquidity issue.
As far as the FCCB is concerned, we had made an announcement much before the FCCB's matured that we have appointed investment bankers to negotiate with the bond holders on our behalf. We had also given an update during the last quarterly results. We informed the shareholders that the discussions with the bond holders are at advanced stage. More than 75 percent of the bond holders have been identified, they have been brought to the table. Three rounds of negotiations have already been done. We are on the verge of closing some kind of understanding between the majority bond holders and ourselves. An announcement to that effect would definitely be informed to the stock exchange as per the rules.
In the meanwhile, we have also informed RBI that we will need about six months extension for effectively negotiating with the bond holders. Right now, I think we are few days away from arriving at an understanding.
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