State Bank of India (SBI) has sold R1,500 crore of loans given to Abhijeet Group firm Corporate Power to Asset Reconstruction Company India (Arcil) for Rs 340 crore, a discount of 77%, sources told Financial Express.
Although Arcil MD & CEO P Rudran confirmed the purchase, he declined to comment on pricing of the deal. According to people familiar with the deal, the asset was very aggressively priced as chances of recovery look grim.
“The asset, or the 1,080-MW power plant, is located in the Maoist-affected area in Latehar district of Jharkhand. This was the argument put forth by the ARCs while demanding deep discounts,” said a source.
The company owes around Rs 4,500 crore to a consortium of bankers, led by SBI. Though banks have been selling bad loans to ARCs at a heavily discounted price, these depend on the underlying value of the asset from which the recovery is to be made. In an earlier interview to FE, Rudran had said that the discount needs to be increased in FY15 as it was really low in FY14.
“According to me, discount rates will vary from asset to asset. However, generally purchases can be made at a price of around 50% of the principal outstanding value, provided there is corresponding security coverage,” he had said.
Manoj Jayaswal-led Abhijeet Group was alleged to be among the biggest beneficiaries of the controversial coal-block allotments as part of which the company got blocks in Jharkhand and Chhattisgarh and was investigated by the CBI.
The group has been struggling to generate enough cash flow and repay dues. In 2013, it had sought a recast of dues under the corporate debt restructuring (CDR) scheme for its companies Corporate Ispat and Corporate Power. These were put on hold after the company failed to rope in a new investor by December 2013.
Based in Nagpur, the group is a diversified business entity with presence in the core sector areas of power, roads, mining, EPC, ferroalloys, steel and cement.