Banks and financial institutions are working out a novel restructuring package for some of the ailing companies in petrochemicals, cement and other core sectors by staggering the interest rate structure.

The first such recast was done for SPIC. The list of companies, which will be covered by such packages may include India Cement.

According to the plan, post debt restructuring, the interest rates will depend on the staying powers of the lenders. In other words, those banks and institutions which want to get out by cutting the tenure of the loans will get less interest income than those which would like to stay put till the end of the tenure.

In some of the cases, a few lenders will exit the consortium early and not charge any interest on their exposures to the stress assets which are being restructured.

For instance, the debt restructuring of one petrochemicals company which is being hammered in visualises two foreign banks and two private banks not charging any interest for their loans for three years by which time their portion of the consortium loan will be repaid by the company.

A few other banks which are willing to take about six-year exposure to the company will get about 7 per cent interest rate, while some banks and one financial institution which will stand exposed to the company for nine years will get the maximum interest rate.

"Once we are aware of the cash flow of a company, we get a fair idea of its debt servicing capacity. Then the consortium of lenders discuss and decide on who wants to stay put and who wants to exit. Those who would like to exit will not get any return following the risk-return principle," said an institutional source.

The lenders, led by the Industrial Development Bank of India, recently cleared the restructuring package for the A C Muthiah group company SPIC.

Following this, SPIC will have to repay the financial institution's debt of over Rs 500 crore (Rs 5 billion) over a period of 10 years at an interest rate of 11 per cent.

The restructuring package, approved by the lenders, allows for variation in interest rate payable by SPIC depending upon the remaining tenure of the loan.

Sources said that around Rs 170 crore (Rs 1.7 billion) of the debt will be retired in the next three years at a four per cent interest.

This is being done as some of the banks preferred to exit from their exposure to the petroleum company within the shortest period possible. Those which preferred to stay for longer will get a higher interest rate.