Sadbhav Engineering has taken a significant step towards financial restructuring as its board of directors approved a comprehensive debt restructuring plan. The plan involves the conversion of ₹890.00 crores of fund-based debt into non-convertible debentures (NCDs) and authorizes the issuance of up to ₹1,000.00 crores worth of debentures on a private placement basis.

Debt Restructuring Framework

The company's restructuring plan centers on converting ₹890.00 crores of fund-based debt into NCDs structured across multiple tranches. The board authorized the execution of a Master Restructuring Agreement and ancillary agreements with consortium lenders to implement this resolution strategy.

The restructuring includes a feature where the NPV of interest computed at 8.99% p.a. IRR on NCD-II will be converted into equity upon plan implementation, subject to regulatory guidelines.

Debenture Issuance Authorization

The board approved the issuance of up to ₹1,000.00 crores worth of rupee-denominated, unlisted, rated, secured, taxable, redeemable non-convertible debentures on a private placement basis. These debentures will be issued in one or more series and tranches as required, aligning with the debt resolution plan submitted to consortium lenders.

Security and Risk Management

The debentures will be secured through hypothecation of current and non-current assets, along with mortgage of identified fixed assets. The plan addresses potential bank guarantee devolutions by converting any guarantees issued before implementation into Fund Based debt (NCD-III) up to a cap of ₹100.00 crores, serviced at 9.00% p.a. IRR.

This strategic move by Sadbhav Engineering aims to streamline debt repayment obligations and address future working capital needs, following the RBI's Prudential Framework for Resolution of Stressed Assets. The company's approach to financial restructuring demonstrates its commitment to long-term financial stability.

Sadbhav Engineering Limited (SEL) has issued a corrigendum to its consolidated financial results for the quarter and half year ended September 30, 2025, addressing typographical errors in its balance sheet figures.

Key Corrections

The company has revised two significant items in its balance sheet:

Impact on Financial Results

SEL clarified that these corrections do not affect the profit and loss statement or other balance sheet items. The standalone results for Q2 FY26 show:

• Net loss: Rs. 1,091.94 lakhs

Financial Performance

The consolidated financial results for Q2 FY26 reveal:

• Revenue from operations: Rs. 24,988.63 lakhs
• Total income: Rs. 30,537.42 lakhs
• Profit before tax: Rs. 3,503.01 lakhs
• Profit after tax: Rs. 2,685.66 lakhs

Other Notable Points

• The company's auditors have expressed a qualified opinion on certain aspects of the financial results, including concerns about the recoverability of contract assets and compliance with regulatory requirements.
• SEL is currently facing challenges in meeting its payment obligations to suppliers and statutory authorities, with delays in loan repayments leading to most lenders classifying the company's accounts as Non-Performing Assets.
• The management has submitted a restructuring plan to the consortium of lenders, which includes asset monetization, fund infusion by promoters, and other strategic initiatives.

Management's Outlook

Despite the current financial challenges, the management remains confident in the company's ability to resume operations and generate cash flows. They cite the ongoing restructuring plan, expected realization of receivables, and potential growth in the infrastructure sector as key factors supporting their optimistic outlook.

Investors and stakeholders are advised to closely monitor the company's progress in implementing its restructuring plan and resolving the issues raised in the auditors' report.