The government-sponsored asset reconstruction business has upgraded its counteroffer to lenders in an effort to obtain the loans of the Anil Ambani-backed Vidarbha Industries Power. According to the sources, CFM ARC had offered 1,000 crore, but the National Asset Reconstruction Company Ltd (NARCL) had offered 1,150 crore for the power business.
The offer was made in response to a historic Supreme Court ruling that denied Axis Bank's request to have the company admitted into insolvency. The ruling stated that the tribunal that approved the company's admission should have taken into account outside factors that caused the defaulting borrower to delay payments.
The offer by NARCL is a combination of 15% cash and 85% as security receipts, while that from CFM ARC is an upfront cash payment subject to all lenders agreeing to sell the debt. the company
has short-, long term loans and non-fund-based limits of ₹3,264 crore rated by them. The rating agency has assigned rating and categorised the account as issuer not cooperating. When taking into account the outstanding loans as evaluated by ICRA, lenders would recover 35% from the NARCL offer and 30% from the CFM ARC offer. Yet according to Vidarbha Industries' annual report for FY22, there are 1,550 crore worth of unpaid loans. The company has loans from Axis Bank, State Bank of India, Bank of Baroda, Canara Bank, Punjab National Bank, and Bank of Maharashtra.
The offer from these two ARCs has stoked expectations of a quick recovery for lenders disheartened with the Supreme Court order rejecting a plea to admit the company despite a default. Also, if lenders accept NARCL's offer, their recovery would be higher on a per megawatt basis for Vidarbha than that made in some of the recent distressed power company sales.
The recovery offered by NARCL for Vidarbha Industries, which has two 300mw power plants, works out to 1.88 crore rupees per megawatt. In contrast, the lender recovered 39 lakh per MW from the sale of Monnet Power and 47 lakh per MW from the sale of Athena Chhattisgarh Power. Under liquidation, Jindal Power and Steel and Vedanta, respectively, purchased the struggling power producers.
Reliance Power, a company backed by Anil Ambani, controls 74%, with Rosa Power Supply Company holding the remaining 24%. In the state of Maharashtra, it operates two coal-fired power stations. The two plants have been inactive since January 2019. This was brought on by lengthy delays in the issuance of regulatory orders and a shortage of fuel for one of the units, she said.