Seri Bonds: pension funds holding the distressed Srei bonds in one location

Pension funds of several entities, including Punjab National Bank () and Food Corporation of India, face the risk of losses on their respective exposures to around ₹4,800 crore of bonds issued by two companies of the troubled financier Srei Group, based in Kolkata, which are currently subject to central bank controlled insolvency proceedings.

Other funds likely to be affected include the MTNL Gratuity Trust, UltraTech CEMCO PF and the Rajasthan Vidyut Karamchari Gratuity Trust, people familiar with the matter told ET.

“Currently, the bondholders are in discussions with the administrators as they determine their claims for the resolution process,” said a person involved in the case.

Srei Group lenders are expected to vote on a group insolvency plan on November 17.

The two Srei Group companies – Srei Infrastructure Finance and Srei Equipment Finance – have ₹4,730 crore outstanding in bonds. These include secured and unsecured non-convertible debentures. The group’s total market borrowings, taken from the National Company Law Tribunal (NCLT) by the central bank, stood at ₹30,783 crore at the end of FY21.

Meanwhile, ET reviewed a list of two dozen investors who had bought the bonds issued by Srei Group. Rajasthan Vidyut Karamchari subscribed through three series of newspapers.

Other investors

Admittedly, the investments might not be substantial for several of the pension funds listed above because there is no single major investor in these bonds. Subscribers also include several high net worth individuals and HUF (Hindu Undivided Family) entities.

MTNL, PNB, UltraTech, Food Corporation and Rajasthan Vidyut did not respond to questions sent by ET.

Srei’s total liabilities consist of a combination of loans, bonds and external commercial borrowings. The Indian Registrar of Shipping Staff Provident Fund and the Caledonian Jute Mills Workers’ PF are also invested in these bonds.

Additionally, smaller companies such as Sadbhav Engineering, Suruchi Foods, Maharashtra Enviro Power and YMS Finance are among the other investors. They could not immediately be reached for comment.

State Bank of India (SBI), Axis Bank, Bank of Baroda, Bank of Maharashtra, Canara Bank, Punjab National Bank, Uco Bank and Union Bank of India are the main lenders of the group. SBI would have the largest share of the loans.

In the context of the insolvency of the group, a joint resolution plan will be drawn up for SREI Infrastructure Financing and SREI Equipment Financing. The two were admitted to the corporate insolvency and resolution process last month on central bank orders.

The Creditors’ Committee (CoC) first met on November 2 when Reserve Bank of India (RBI) appointed administrator Rajneesh Sharma briefed the lenders on the finances of the two indebted companies.