Eleven companies with a gross principal exposure of Rs 4,000 crore (Rs 40 billion) to Indian banks and financial institutions will be either restructured or put on the block by September 30 next year.
They are Core Healthcare, Rajendra Steel, Sri Rama Multitech, Uniworth, Biral VXL, Kalyanpur Cement, Goldstar Alloys & Steel, GSL, Asian Peroxide, Modern Denim and Percision Fastner. In some of these cases, their assets could be stripped and sold in the market over the next one year.
| On the block |
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Core Healthcare Rajendra Steel Sri Rama Multitech Uniworth Biral VXL Kalyanpur Cement Goldstar Alloys & Steel GSL Asian Peroxide Modern Denim Percision Fastner |
The Asset Reconstruction Company (India) Ltd or Arcil is in the process of acquiring these assets over the next few weeks.
"We will complete the process by September 30. By March next year we will take over assets worth Rs 20,000 crore (Rs 200 billion) from the Indian financial system," said Rajendra Kakker, managing director and CEO of Arcil.
ICICI Bank, Industrial Development Bank of India and State Bank of India, the main promoters of Arcil, roughly account for 50 per cent of these assets.
ICICI Bank leads the pack with Rs 1,000 crore (Rs 10 billion) worth of assets, followed by the Industrial Development Bank of India (Rs 600 crore) and State Bank of India (Rs 400 crore).
Even though the gross principal outstandings of the 11 accounts are to the tune of Rs 4,000 crore (Rs 40 billion), Arcil will buy out these assets at around a 60 per cent discount.
"We will explore all possibilities like restructuring, mergers and acquisitions and even stripping assets and selling them in the market. The entire exercise will be completed in one year," Kakker said.
He also hinted that several foreign and domestic investors had expressed interest in infusing last- mile equity and debt to restructure these companies.
Arcil is also raising its equity base from Rs 10 crore (Rs 100 million) to Rs 25 crore (Rs 250 million). The decision will be taken at the forthcoming Arcil board meeting. This will be done to help Arcil raise its transaction capability.
"We will also ask the existing promoters to infuse fresh equity if they want to regain ownership as in most of the cases the value of the equity has become zero. If they are not willing do so, the Arcil fund will own the equity and as part of the recast a substantial portion of debt will be converted into equity," said Kakker.
Arcil President and Chief Operating Officer S Khasnobis said that the structure of the companies would be totally overhauled, resulting in drastic changes in the debt equity ratio.
Arcil is kicking off road shows across the country to buy new assets. "We will approach every bank. We can buy assets if 75 per cent of the lenders in value terms agree to sell them. Our objective is to take away Rs 20,000 crore (Rs 200 billion) worth of bad assets from the system by the year end," Kakker said.
