State-owned ‘bad bank’ acquires three accounts

Prodded by the Centre, India’s newly created state-owned ‘bad bank’ is cutting more deals. In the past two weeks, it concluded the acquisition of three accounts – Dharani Sugars and Chemicals, SPML Infra; and Parenteral Drugs. That’s in addition to at least half a dozen in-the-works offers by end-March, people aware of the likely bids told ET.

National Asset Reconstruction Company Ltd (NARCL) won the debt of three companies at an uncontested Swiss challenge auction some weeks ago. However, the NARCL was awaiting approval from the government on issuing guarantees on the security receipts to conclude the deals.

The ARC has offered to acquire the debt of Rolta, Haridwar Highways and Kamachi Steel, among others. However, lenders have yet not given consent to proceed with the sales. In all, NARCL concluded the acquisition of six companies since it started operations to house banking-sector advances that had gone sour. Dharani Sugars, SMPL Infra and Parenteral Drugs were acquired this fiscal year, while Jaypee Infratech, SSA International and Helios Photo Voltaic were acquired last fiscal year. Dharani Sugars was acquired at ₹222.5 crore, SMPL was at ₹405 crore, while Parenteral Drugs was acquired for ₹50 crore.

NARCL had improved the offer for Parenteral Drugs to ₹50 crore after the external company of State Bank of India rejected the ₹45 crore offer. The finance ministry has conveyed to NARCL to expedite the acquisition process since loans acquired by them are below the internally approved targets, said people cited above.

However, differences between NARCL and India Debt Resolution Co Ltd (IDRCL) has delayed the acquisition of debt, the same person said.

NARCL and IDRCL now have a principal-agent relationship wherein NARCL acquires stressed loans from banks while IDRCL operates as its agent with a mandate to resolve the debt. In August, NARCL chairman Karnam Sekar resigned within weeks of IDRCL recommending that NARCL should be merged with itself to optimise business opportunities and reduce cost.Early 2022, SBI’s chairman, Dinesh Khara, had informed the media that NARCL would acquire 15 accounts with ₹50,000 crore in loans during FY22.Banks had identified 38 accounts for sale to NARCL with Rs 82,845 crore debt, he had said at that press briefing on January 28 of that year. But NARCL failed to acquire any assets in FY22 but it extended its Rs 50,000 crore target to FY23 but managed to acquire only three accounts with principal debt of Rs 10,300 crore. In FY24, it acquired three accounts but is hoping to close at least six accounts, the people said.