Andhra Bank takes possession of 2 Deccan Chronicle Holdings properties

The combined value of these properties is Rs 160 cr

Andhra Bank has said to recover its loan to Deccan Chronicle Holdings Ltd (DCHL), it had taken possession of two of the company’s properties worth Rs 160 crore.

The media company, which owed about Rs 200 crore to the bank, had failed to repay it in November last year.

The move by Andhra Bank followed a recent ruling by the Andhra Pradesh High Court that allowed Kotak Mahindra Bank to sell the printing press premises of DCHL in case the company failed to repay a loan of about Rs 100 crore within three months.

S K Kalra, executive director of Andhra Bank, told <I>Business Standard</I>: “We have forcefully taken possession of the two properties, one each in Bangalore and Chennai, under sections of the Sarfaesi (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act. The combined value of these properties is about Rs 160 crore.”

Legal hurdles remain
He said the bank had taken possession of these properties eight-10 days ago, adding it was hopeful of clearing all legal hurdles before auctioning the two properties.

About seven months ago, the bank had filed a petition in the Hyderabad Debt Recovery Tribunal, seeking recovery of a loan from DCHL and, subsequently, issued notices to the company under the Sarfaesi Act.

The Act allows banks and financial institutions to auction properties (residential and commercial) when borrowers fail to repay loans.

Earlier this year, the DCHL management had said it owed about Rs 4,000 crore to various banks and financial institutions; most of its dues were short-term loans.

In March, the Central Bureau of Investigation had initiated a probe into the company’s financial activities.

This followed Canara Bank lodging a complaint, saying there were irregularities in the way the DCHL management had availed of and used the loans, including mortgaging a particular property with multiple lenders.

In July 2012, Mumbai-based Future Capital accused the company of transferring shares it had a lien on, against a loan of Rs 170 crore.

Soon, a host of lenders to the company initiated legal action against it.

Aggressive on loan recovery
Andhra Bank’s Kalra said the bank had decided to aggressively pursue the Sarfaesi Act to recover corporate loans, apart from seeking other legal remedies. The bank has been reeling under huge non-performing assets, leading to high provisioning.

For the quarter ended September, the bank reported a net profit of Rs 71 crore, a steep 78 per cent fall compared with Rs 326 crore in the corresponding period last year.

“We have taken possession of a Rs 33-crore property from another loan account. We expect to see some big recoveries in the coming days. When it comes to recovery, only big corporate loans become a problem,” Kalra said.