Sterling Oil Resources

Ltd NPA
Assignment-II
Group#8
December 29, 2015

Agenda
Highlights of the Project
Project Finance by Banks
Reasons why banks gave loans
Reasons for the NPA
Key Findings

Highlights of the Project

Parent Company- Sterling Biotech Ltd.

(Sandesara group company)
Sterling Oil Resources Ltd. ranked 10 th in
defaulter list by AIBEA (Rs.1197 Crores
outstanding
Total project cost: Rs. 2500 Crores
Promoters- Rs. 1125 Crores(paid up 5 cr.,
unsecured-1120 Cr)
Term borrowings Rs. 1375 Crores

Project expenditure: Rs. 2460 Crores.

ICRA Rating: LBB+ for term loans

Project Finance by Banks

Associated Companies:
Name of the Company

Loan Amt (Cr.)

Sterling Biotech Ltd

Sterling Oil Resources Ltd
Sterling Port
Sterling SEZ
Total Loans

1732
1197
334
409
3672

Major suffering Banks:

Name of The Banks
Andhra Bank
Bank Of Baroda
Andhra Bank
Uco Bank
Punjab National Bank
Allahabad Bank

(Rs Crore)
450.33
333.35
297.09
288.69
283.49
241.39

Reasons why banks gave loans

Oil block
investment

sector

was

prime

High cash accruals projected

Expected Pricing benefits

Expected rise in oil production

source

of

Reasons for the NPA

Geological risks

High geopolitical risks in Nigeria (the country

of operations)
Increased instances of militant threats

Company risk

Delay in commissioning of oil off-take

infrastructure
Moderately high level of leveraging for the
project.
Volatility in oil selling price due to demand
supply scenario and changing crude prices

Key Findings

Lenders point of view:

Promoters stake was far more less as

compared to loan amount
Deferred liabilities were high
Promoters were not stable, no guarantee or
collateral given to bank
Company was not strategically sound

Key Findings

Companys point of view:

Demand and supply analysis of industry

along with Geographical and Political
Conditions was required
Proper Management was required
Creditors liability and Turnover ratio needed
to be optimized
Volatility in the crude oil prices along with
proper spread should be maintained to avoid
forex and exchange risk.

Thank you