Arcil NPA buyout at Rs 16,500 cr

Move led to 13% reduction of the non-performing assets from the system

Asset Reconstruction Company of India (Arcil)'s buyout of non-performing assets amounting to Rs 16,500 crore till the end of June this year has led to a 13 per cent reduction in NPAs from the system.

While the amount cannot be directly related to the Rs 90,000-crore NPA in the system, considering the principal debt of Rs 8,100 crore along with 50 per cent of the Rs 8,400-crore interest component, approximately 13 per cent NPAs have been reduced, ARCIL's newsletter said today.
 

Buying NPAs
In crore
Bank/ FI	Total Dues	Acquisition Price	Principal Debt	No. of Cases
ICICI Bank	9,028	2,395	4,529	136
State Bank of India	2,634	428	1,402	189
IDBI	1,334	349	497	20
IFCI	1,144	172	348	9
Punjab National Bank	842	54	371	40
Bank of India	431	78	199	7
Canara Bank	192	14	73	6
Exim Bank	155	105	138	4
Others	4208	119	387	72
Total	16,492	3,714	7,944	483

Importantly, 35 large cases out of the 108 cases acquired at a price of Rs 1,406 crore have been resolved. Arcil expects an upside of 17 per cent (weighted average) on its acquisition price.

The percentage has been computed taking into account a likely upside of 14 per cent in the portfolio acquired up to March 31, 2004, a 33 per cent upside for cases acquired in 2004-05.

In the first quarter of the current financial year, Arcil has acquired fresh dues of Rs 270 crore at an acquisition price of Rs 50 crore.

A total of 368 financial assets (108 large cases and 260 small cases) related to 17 different industries have been acquired by Arcil till June 30, 2005 from 25 banks and financial institutions.

Of the total dues acquired, ARCIL has been able to resolve 35 per cent of the principal debt component. Of the 47 acquired in 2004-05, Arcil has been able to resolve six and has completed settlements with 32 small borrowers out of 260 at an average upside of more than 20 per cent.

Sixty-eight per cent of the units acquired (in value terms) in the large NPAs represent operating units while 22 per cent are non-operating, and the remaining 10 per cent represent partially operating units.

The value realisation in resolving large cases has revolved around restructuring and mergers and acquisitions in 87 per cent of the cases. In 13 per cent of the cases, settlements have been through sales of assets.