Gayatri Projects OTS Ends CIRP With 97% Lender Support

CIRP withdrawal marks a major legal milestone

Gayatri Projects has completed the withdrawal of its Corporate Insolvency Resolution Process, or CIRP, after lenders approved a one-time settlement proposal under Section 12A of the Insolvency and Bankruptcy Code. The National Company Law Tribunal's Hyderabad bench approved the withdrawal on September 10, 2025. State Bank of India, which was the original applicant in the insolvency case, filed the withdrawal application. The Resolution Professional was discharged following the closure of the process. The development restored management control to the promoters after a prolonged financial restructuring exercise. Earlier references to a promoter plea against liquidation underline the importance of lender approval in resolving the company's insolvency situation. Under Section 12A, a settlement requires approval from lenders holding at least 90% of voting share. Gayatri Projects cleared that threshold with support from more than 97% of lenders.

Lenders backed the settlement proposal

The Committee of Creditors approved the promoters' one-time full and final settlement proposal with a 97.21% voting share, according to the company disclosures. The settlement involved a fund-based offer of ₹750 crore from the promoters. It also included a continuing guarantee relating to non-fund-based limits of ₹1,229 crore. The company was required to make a debt service reserve account, or DSRA, deposit of ₹50 crore within 12 months of the NCLT approval. Reports said the broader settlement plan was valued at about ₹2,400 crore against lender dues of about ₹8,100 crore. That implied a recovery of around 30% for lenders after a resolution process lasting roughly three years. Promoters had deposited ₹115 crore at an earlier stage, while the balance was expected to be arranged through asset monetisation and investor participation. The settlement structure was central to the lenders' decision to support withdrawal of the CIRP.

Fund-based repayments and lender NOCs

Gayatri Projects said it had paid the entire fund-based settlement amounts as of the date of its audited financial results. It also said it received no-objection certificates from all lenders for release of charges over specific secured assets. Qualified borrowings declined sharply from ₹3,516.85 crore to ₹63.52 crore following the NCLT-approved withdrawal, based on figures disclosed by the company. This reduction reflects the effect of the settlement rather than a routine operating improvement. The company recognised an exceptional gain of ₹2,384.00 crore from the difference between outstanding dues and the settlement amount. Such an accounting gain does not represent operating revenue or cash generated from projects. It records the financial effect of settling obligations at an amount below the previously outstanding dues. Investors therefore need to distinguish the settlement-related gain from the company's underlying EPC execution performance.

A PNB loan remained outstanding

The company was not fully free of all obligations as of March 31, 2026. A secured term loan due to Punjab National Bank remained outstanding at ₹143.91 crore, including interest of ₹80.39 crore. Gayatri Projects classified this loan as a default in its disclosures. The promoters were corresponding with PNB to obtain a no-objection certificate for the sale of mortgaged immovable properties. This outstanding exposure is an important qualification to statements describing the company as debt-free after the settlement. The company has said its broader debt settlement process was successfully completed under Section 12A, but the PNB matter remained unresolved at the stated reporting date. The eventual release of the mortgaged properties depends on progress in those discussions. The disclosure also shows that the post-CIRP financial position must be assessed using the latest lender-specific information.

Key settlement and debt figures

Fundraising remained part of the plan

Following the CIRP withdrawal, Gayatri Projects scheduled a board meeting on September 25, 2025, to consider fundraising options. The company had said it was discussing equity raising with financial investors as part of efforts to address its financial position. Management indicated that repayment and implementation of the resolution proposal would free the company from fund-based limits. This could improve its ability to arrange working capital and participate in project execution, subject to lender arrangements and the completion of outstanding obligations. The company had earlier said that it needed to repay creditor debts within 90 days of the withdrawal process. Financing flexibility is particularly relevant for EPC contractors because project mobilisation, bank guarantees and working-capital cycles can require substantial funding. Gayatri Projects also reported high debtors of 208 days, pointing to the importance of collections for cash-flow management. Any fundraising plan must therefore be viewed alongside receivables, project execution and the remaining PNB loan issue.

EPC model and operating backdrop

Gayatri Projects operates in engineering, procurement and construction, with work spanning roads and highways, irrigation, dams, water infrastructure, water supply and mining-related infrastructure. Its core model involves securing government civil-engineering contracts, executing projects and receiving payments under contractual terms. The company has sought to move away from an asset-heavy toll-road approach towards an asset-light EPC model. This approach can lower the capital tied up in owning infrastructure assets, but it still requires strong project management, bank guarantees and timely receivable collections. The company has used joint-venture partners and local suppliers for projects across more than a dozen states. Its reported order book was about ₹5,500 crore after the settlement process, although project conversion depends on execution conditions and funding availability. Price-variation clauses in fixed-price contracts can help address some commodity-price movements, but they do not remove all construction and payment risks. The settlement allows the company to focus again on its operating pipeline after the insolvency process.

What the withdrawal means for lenders and investors

For lenders, the settlement converted a long-running insolvency case into an agreed recovery framework supported by a large creditor majority. For the company, it ended formal CIRP and returned management control to the promoters. The recovery was lower than the total dues cited in reports, which is why the terms required substantial lender consent. For shareholders and investors, the central issues now are execution of the settlement commitments, closure of the remaining PNB default and the company's ability to improve cash flows. The exceptional gain from the one-time settlement should not be treated as recurring profitability. Similarly, the reduction in qualified borrowings is significant, but it does not eliminate the need to track contingent and non-fund-based exposures. Gayatri Projects' ability to bid for and execute fresh projects will depend on its financial arrangements, lender relationships and operating performance. The company's disclosures provide the relevant milestones rather than a guarantee of future outcomes.

Outlook after the insolvency exit

Gayatri Projects' CIRP withdrawal is a material turning point after the lenders' 97.21% approval and the NCLT order of September 10, 2025. The promoters' ₹750 crore fund-based settlement and ₹1,229 crore non-fund-based arrangement formed the basis for the resolution. The company has reported payment of the fund-based amounts and receipt of lender NOCs over specific secured assets. However, the ₹143.91 crore PNB term loan remained classified as a default as of March 31, 2026. The next relevant developments are progress on the PNB no-objection certificate, any asset sales linked to the mortgaged properties and the company's fundraising decisions. Updates on collections and execution of its EPC order book will also be relevant to its financial recovery. The completed CIRP withdrawal provides a legal and financial reset, while the remaining obligations will determine how fully that reset translates into operational flexibility.