SBI and BoI seek bids for NPAs worth Rs 7,000 crore

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Seven months after the Supreme Court (SC) ordered the maintenance of status quo on insolvency proceedings against manufacturing firm Jayaswal Neco Industries, State Bank of India (SBI) on Thursday sought bids from asset reconstruction companies (ARCs) for the company. The lender said it already has a bid in hand from an investor interested in buying the asset and the auction will be through the Swiss challenge method, based on the existing bid. “Besides the fund-based outstanding of Rs 1,362.89 crore at reserve price of Rs 885.89 crore, the bidder would also be required to furnish guarantee/100% cash margin for the non-fund-based outstanding to the extent of Rs 171 crore, or the non-fund-based outstanding as on the date of assignment, whichever is higher, subject to a maximum of `219 crore (non-fund-based),” SBI said in an auction notice.

In April, the apex court had passed its order directing status quo after Jayaswal Neco pleaded that it should not have been subjected to insolvency proceedings because a majority of its lenders had agreed to a restructuring plan for the company’s debt. Jayaswal Neco owes its lenders Rs 3,522 crore and was named in the RBI’s second list of large non-performing assets (NPAs) which were to be resolved under the bankruptcy law, unless resolved by other means by mid-December.
SBI is seeking a 100% cash bid for the asset and the reserve price implies it is willing to take a haircut of up to 65%.

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The bank has also put on sale two other bad-loan accounts — Ahmedabad-based Sona Alloys (Rs 648 crore) and MCL Global Steel (Rs 100 crore). For Sona Alloys, it will entertain bids that offer a mix of cash payments and security receipts (SRs), with haircuts ranging between 70% for a full-cash offer and 62% for a bid paying 25% in cash and the rest through SRs. For MCL Global, only full-cash bids will be accepted, with the haircut capped at 68%.

Bank of India (BoI) also invited bids for 44 NPA accounts worth a total Rs 4,703 crore on Thursday. The accounts include Dighi Port (Rs 273 crore), Lavasa (Rs 328 crore), Sona Alloys (Rs 23.45 crore) and Visa Steel (Rs 67 crore). Visa Steel, too, is a second-list account.  BoI has earlier made multiple attempts to palm off some of these accounts such as Lavasa, Visa Steel and Jyoti Power during the last few months.

BoI’s recoveries from sale of bad assets during the September quarter did not match its expectations. Dinabandhu Mohapatra, MD and chief executive officer, BoI, said, “We have recovered around Rs 282 crore during this quarter and that process will continue through Q3 and Q4 also. We have identified accounts worth `10,000 crore for sale, from which we are expecting good recoveries.”

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