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NARCL offers ₹270 cr for Pink City Expressway, recovery likely at 15%

The government-backed bad loan aggregator, National Asset Reconstruction Co Ltd (NARCL), has made a Rs 270 crore offer for Pink City Expressway Private Limited (PCEPL), the company which was formed to build, operate and maintain the six-lane Gurgaon-Kotputli-Jaipur section of the Delhi-Jaipur highway.
PCEPL has Rs 1,761 crore of outstanding loans and another Rs 30 crore of bank guarantees, according to rating agency Care, which means lenders can recover about 15% of their claims from NARCL.

The bad bank acquires loans by paying 15% of the amount in cash and the rest in security receipts (SRs), which are to be matched with recovery over time. These SRs are guaranteed by the government, valid for five years, to be invoked by banks in case of resolution or liquidation of the bad loan.

“The PCEPL offer was finalised last week after NARCL completed all its financial and legal due diligence. Individual banks have to approve the transaction for it to be completed,” a person familiar with the process said on condition of anonymity.

NARCL did not reply to ET’s emailed queries till press time.

About a dozen banks, led by IDBI Bank and including Canara Bank, IFCL and State Bank of India (SBI), are lenders to the project. The offer is the first from NARCL to banks in more than four months and the first since changes in the top management of the bad bank. Former SBI managing director Diwakar Gupta took over as NARCL chairman in early December, months after Karnam Sekar resigned in August amid differences over the functioning of the institution. Earlier this month, NARCL CEO Natarajan Sundar quit and Canara Bank chief general manager P Santhosh was sent on deputation to NARCL.

“There is now a concentrated effort to push through the takeover of assets which have long been in the pipeline. PCEPL has been marked as NPA (non-performing asset) since 2020 and there has been no other option for banks to recover their dues. NARCL is hoping to expedite recovery through arbitration claims pending with the National Highway Authority,” said a second person aware of the matter.

PCEPL is a joint venture of Emirates Trading Agency from Dubai, KMC Group of Hyderabad and IKSHU Infrastructure Pvt Ltd. The company had a 12-year agreement which was terminated because of delays. The highways authority has taken over the project.

“Besides delays, the company was hit by agitations on the stretch, Covid-19 lockdowns and other issues which impacted the expected traffic on the highway. Banks have not been getting any money from this account so it’s best to sell it and wait for any arbitration claims that could come,” said a third person.

The offer for a road asset marks a change in strategy for NARCL, which was earlier touted to be an aggregator for large bad debts in the banking system.

“NARCL is now actively looking at road assets because the high value accounts have not really progressed,” said the second person cited earlier. “They hope to recover dues through negotiations with the highway authority and pursue arbitration claims. Pursuing these smaller accounts could improve recovery and also speed up the process of asset acquisition which has so far been lagging.”

In all, NARCL has concluded the acquisition of six companies since it started operations in January 2022 to house banking sector advances that had gone sour. The total debt acquired by NARCL currently stands at Rs 14,166 crore, a far cry from the Rs 82,845 crore target set by SBI chairman Dinesh Khara in January 2022.

Delays in the government guarantee renewal, lack of consensus with banks on the best price for assets and differences between NARCL and its primary agent IDRCL have ensured that the bad bank is running behind schedule.

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