State Bank of India (SBI) has offloaded its ₹929-crore exposure in Indian Steel Corp. Ltd to India Resurgence ARC, a 50:50 joint venture between Piramal Enterprises Ltd and Bain Capital Credit, to recover ₹362 crore in cash.
The public sector lender took a 61% haircut on the asset, a person aware of the development said, requesting anonymity.
The asset reconstruction company (ARC) is also in discussions to buy out the loans of Punjab National Bank, Corporation Bank, and IDBI in Indian Steel Corp., which had been incorporated in 2002 by the Ruchi Group of Industries and Mitsui and Co.
“A JV between Piramal Enterprises Ltd and Bain Capital Credit, confirms acquisition of all of State Bank of India’s debt exposure in Indian Steel Corp. Ltd, a company which we believe, with restructuring, would have strong growth prospects linked to India’s infrastructure and consumption needs,” an India Resurgence spokesperson said an emailed response to Mint’s queries.
The company has a manufacturing facility at Bhimasar, near the Kandla port in Gujarat.
India Steel Corp. had reported net losses of ₹84 crore in FY18 on an operating income of ₹1,245 crore, compared to net losses of ₹198 crore and operating income of ₹1,533 crore in FY17, according to the most recent credit rating report by Icra, dated August 2018.
Icra had rated the company’s loan instruments D, or default, for more than three years.
India Resurgence Fund was launched in 2016 to invest in special situations and distressed assets across sectors, barring real estate.
The fund looks “to invest in businesses that require balance sheet restructuring with a focus on debt restructuring” and fund companies with “strong growth prospects linked to India’s infrastructure and consumption needs”, according to its website.
Last November, the fund had invested $156 million via debt and equity instruments, in the marine chemicals business of the Chennai-based Archean Group.
Mint had reported in February that SBI had decided to sell 487 bad loan accounts worth more than ₹1,000 crore in corporate, small and medium enterprise, and housing segments to ARCs, other banks and financial institutions on a full-cash basis to recover debt quickly and side-step the complicated bankruptcy process.