Bajaj Hindusthan Sugar Faces ₹276 Crore Payment Deadline

Bajaj Hindusthan Sugar Ltd is under financial pressure as the payment deadline approaches. The company was to pay ₹276 crore by March 31, 2024, for its optionally convertible debentures (OCDs). Additionally, another payment, a yield-to-maturity (YTM) premium, was due on March 31, 2025. However, the company’s weak financial condition has put these obligations at risk.

Care Ratings recently downgraded BHSL’s long-term rating from ‘B+’ to ‘D,’ signaling a high possibility of default. The company is struggling to raise funds for debt repayment. As of September 30, 2023, BHSL had only ₹56 crore in free cash, which is not enough to cover its outstanding liabilities.

BHSL’s financial troubles stem from high debt, weak liquidity, and a leveraged capital structure. Additionally, its investments in group companies and the cyclical nature of the sugar industry have further complicated its situation. Although a restructuring plan was proposed in 2022, with an extended repayment schedule until 2040, the company continues to face severe financial stress.

In October 2023, NCLT dismissed an insolvency plea filed by SBI after BHSL cleared some dues. However, the total outstanding loans remain unclear, and the company is still struggling. By March 31, 2024, it had an unpaid YTM liability of ₹2,885.4 crore, which will rise to ₹3,412.5 crore by December 31, 2025.

If the company’s financial position does not improve, it may also default on YTM payment. The situation highlights the challenges faced by highly leveraged companies in regulated industries, especially those with limited access to fresh capital. Investors and creditors are closely watching whether BHSL can navigate this crisis or if it will face further financial turmoil.