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asset reconstruction: NARCL emerges winning bidder for Rs 17,000 cr debt

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Government-backed National Asset Reconstruction Company of India (NARCL) emerged as the winning bidder for six distressed accounts with outstanding debt of more than ₹17,000 crore that banks have put on the block in the last three months, said people with knowledge of the matter.

The six accounts are Metenere, Pink City Expressway, West Haryana Highways Projects, Entertainment City, SEW LSY Highways and Simplex Infrastructures. NARCL has offered ₹2,331 crore for the loans totalling ₹17,139 crore, according to the people.

Seven other accounts have binding offers from NARCL. A Swiss auction process, with NARCL’s offers as the base, is held separately for each of these companies and the due diligence by potential bidders is still ongoing.

NARCL Emerges Winning Bidder for `17k-cr DebtET Bureau

These are Metalyst Forgings, Rohtak Hisar Tollways, Wind World India, Hitodi Infrastructure, Morarjee Textiles, Sion Panvel Tollways and West Haryana Highways Projects.

All the offers made by NARCL are under the 15:85 structure, of which 15% of consideration is in cash and the balance 85% is security receipts, which will be payable on recovery of the loan or in five years, whichever is earlier. The government has provided a sovereign guarantee on the shortfall in the recovery of loans promised by NARCL, which gives the government-backed company a competitive edge over other ARCs.

NARCL has been actively acquiring distressed loans since Diwakar Gupta took charge as chairman in the first week of December 2023. Before this, Gupta was chairman of India Debt Resolution Company, an agent for NARCL. He replaced Karnam Sekar, who resigned last August soon after IDRCL proposed to the finance ministry to merge NARCL with IDRCL, which did not materialise.

Since it started operations in January 2022, NARCL has completed acquisition of six accounts: Jaypee Infratech, SSA International, Helios Photovoltaic, Dharani Sugars, SMPL Infra and Parenteral Drugs. It also acquired Srei Infrastructure Finance and Srei Equipment Finance under the Insolvency and Bankruptcy Code.

Meanwhile, FY25 that starts next month will be a challenging one for IDRCL which is tasked with the mandate to resolve the distressed loans acquired by NARCL, said people from the ARC industry. The challenge would be to recover the money without invoking the sovereign guarantee, they added.

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