State-run banks have recommended to the government to set up an asset reconstruction company sponsored by the National Investment and Infrastructure Fund (NIIF) for resolution of stressed assets, media reports said.
Citing a government official, The Economic Times said the banks had been thinking to get NIIF as a sponsoring agency and that they themselves could pitch in some capital.
Piyush Goyal, the acting finance minister, had last week set up a committee to examine the idea of an asset reconstruction company that would take over banks’ bad loans and give its recommendations within two weeks.
The Indian government had created NIIF to catalyse capital from international and domestic investors into energy, transportation, housing, water, waste management and other infrastructure and allied sectors.
The government has committed around Rs 20,000 crore ($3 billion) for the fund, or about half the total target corpus. NIIF’s strategy includes anchoring equity, quasi-equity and debt funds in partnership with investors targeting investments in the relevant sectors in India.
In another development, Adani Wilmar Ltd has emerged as the highest bidder for debt-laden Ruchi Soya Industries Ltd, according to multiple media reports.
Adani Wilmar offered about Rs 6,000 crore, which included Rs 4,300 crore for repayment of loans and Rs 1,714 crore in equity investment.
This is higher than the bid by Baba Ramdev-backed Patanjali Ayurved, which had offered about Rs 5,700 crore. This included Rs 4,065 crore for repayment of loans and Rs 1,700 crore in equity.
Creditors to Ruchi Soya have decided to follow the Swiss auction method, giving bidders the opportunity to match each other’s offer or improve their bids, The Times of India reported. The company’s debt stood was around Rs 12,000 crore.
Meanwhile, Patanjali Ayurved had raised questions involving law firm Cyril Amarchand Mangaldas being a legal adviser to Ruchi Soya’s resolution professional and Adani Wilmar simultaneously, according to the media reports.
Cyril Amarchand Mangaldas had previously resigned as the legal adviser to Adani Wilmar.
Ruchi Soya is in the midst of insolvency resolution proceedings initiated by the National Company Law Tribunal following petitions from creditors Standard Chartered Bank and DBS Bank.
Ruchi Soya sells food products and edible oils under the brands Nutrela, Mahakosh, Sunrich, Ruchi Gold and Ruchi Star.
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