Lenders to sell Videocon Oil Ventures, Amtek Auto debt to NARCL

Rs 90,000-crore NPAs of 22 firms to be transferred in first tranche

Large non-performing assets (NPAs) of 22 companies, including Videocon Oil Ventures, Amtek Auto, Reliance Naval, and Lavasa Corporation, are set to be sold to National Asset Reconstruction Company (NARCL) in the first tranche, banking sources said.

These companies were earlier referred to the National Company Law Tribunal (NCLT) for debt resolution under the Insolvency and Bankruptcy Code, 2016. As there has been significant delay in resolving these accounts due to prolonged litigation, the lenders are planning to sell them to NARCL – set up recently by banks to aggregate and consolidate stressed assets for their subsequent resolution. Banks will transfer up to Rs 90,000 crore of debt in the first tranche to NARCL.

According to a banking source, State Bank of India (SBI) is planning to sell Videocon Oil Ventures’ bad loans of Rs 22,532 crore, while Union Bank of India intends to do the same with the Rs 9,000-crore exposure to Amtek Auto. Reliance Naval and Engineering’s loans of Rs 8,934 crore are being sold by IDBI Bank. Union Bank of India, on the other hand, is transferring the debt of Rs 1,400 crore of Lavasa Corporation, a hill city near Pune, to NARCL.

The source said Videocon Oil Ventures did not get good offers during the debt resolution undertaken by its lenders. Besides, the debt resolution of its parent, Videocon Industries, is mired in litigation. In the case of Reliance Naval, the banks have received a Rs 2,100-crore offer from Mumbai-based Hazel Mercantile and another offer worth Rs 400 crore from the Naveen Jindal group. For Lavasa Corporation, the lenders are still undecided over the two offers received from Dhir Hotels and Resorts and Darwin Platform Infrastructure, the source said. The last date for finding a resolution for Lavasa is November 25.

NARCL received its licence in October from the Reserve Bank of India (RBI) to operate as an asset reconstruction company. It plans to start operations by March next year. NARCL plans to acquire these accounts through 15 per cent upfront cash and the remaining by issuing security receipts.

The Centre plans to give its guarantee of up to Rs 30,600 crore to back security receipts issued by NARCL. The guarantee will be valid for five years. The condition precedent for the invocation of guarantee would be resolution or liquidation. The guarantee will cover the shortfall between the face value of the SR and the actual realisation.

NARCL will acquire assets by making an offer to the lead bank. Once NARCL’s offer is accepted, another government-backed firm, India Debt Resolution Company (IDRCL), will be engaged for management and value addition.