NARCL likely to wind up Srei group’s equipment finance arm – ET Infra


After completion of the takeover of two Srei grou

p firms through NCLT route, state-owned asset reconstruction company NARCL is expected to retain only one of the acquired companies, official sources said. The Kolkata bench of the National Company Law Tribunal (NCLT) has approved the resolution plan of NARCL for takeover of the twin Srei firms under Insolvency and Bankruptcy Code.

The resolution plan had already received approval from banking sector regulator Reserve Bank of India.

NARCL emerged as the winning bidder for the two Srei group firms — Srei Infrastructure Finance Ltd (SIFL) and Srei Equipment Finance Ltd (SEFL) — through a bidding process in February.

“According to the resolution plan submitted, the National Asset Reconstruction Company Ltd (NARCL) will cease all fresh lending activities in the group’s equipment financing arm — SEFL, and after recovering the outstanding debt, it will be ‘wound up’,” the official told PTI.

The loan repayment process may extend for the next seven years, he said.

At present, most of the assets remain within SEFL’s books due to a previous restructuring.

“As outlined in the resolution plan, NARCL, upon assuming control of the companies, will abstain from pursuing fresh lending from SEFL. The non-banking financial company (NBFC) will be dissolved once its outstanding debt is recuperated and ongoing court cases are settled,” an official close to the development told PTI.

“SIFL with a cleaner balance sheet and a few legal imbroglios will be revitalised, and fresh lending operations will be conducted under this entity. Regulatory authorities are also aligned with this perspective, as previously discussed,” the official said.

This strategy aims at ensuring business continuity and safeguarding employment.

Kanorias, the erstwhile promoters, did not offer any comments on the development.

No official comments were received from NARCL.

On February 15, the Committee of Creditors (CoC) for the Srei group firms endorsed NARCL’s resolution plan, which garnered the highest vote share of 89.2 per cent.

There were three final contenders for Srei companies.

NARCL offered a Net Present Value (NPV) bid of Rs 5,555 crore. Authum Investment and Infrastructure secured the second-highest vote with 84.86 per cent through a bid of Rs 5,526 crore.

The consortium comprising Varde Partners and Arena Investors with a financial bid of approximately Rs 4,680 crore, secured the third spot with around nine per cent of the vote, according to the official.

The total value of NARCL’s resolution plan stands at Rs 14,301 crore, encompassing a cash component of Rs 3,001 crore, debentures and security receipts amounting to Rs 3,300 crore, along with an uncommitted payment of Rs 8,000 crore via Optionally Convertible Debentures (OCDs).

These payments are contingent upon the recovery from underlying assets over the ensuing seven years.

Creditors accepted a haircut of 55 per cent, considering a complete retrieval of the uncommitted value of Rs 8,000 crore. The cumulative claims of financial creditors for the two NBFCs amounted to Rs 32,750.22 crore.

The Reserve Bank of India superseded the boards of SIFL and SEFL in October 2021 due to governance concerns and repayment defaults.

Subsequently, the banking regulator approached the NCLT Kolkata to initiate the insolvency proceedings against the twins for a consolidated resolution.

  • Published On Aug 14, 2023 at 12:26 PM IST

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