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The National Asset Reconstruction Company of India (NARCL) has made a firm offer to acquire INR 988 crore of debt from lenders for a road project in Ludhiana managed by Essel Infraprojects, according to sources familiar with the matter. This significant move comes as NARCL aims to take on distressed assets in an effort to clean up the banking sector.
The project in question involves the construction of a 78-kilometer, four-lane stretch of National Highway-95 between Ludhiana and Talwandi Bhai in Punjab, passing through Moga. The project, managed by Essel Infraprojects and Pan India Network as part of a joint venture, faced delays due to changes in contractors and difficulties in obtaining clearances. Most of the pending work lies between Moga and Talwandi Bhai.
NARCL's offer is structured so that 15% of the consideration is in cash, with the remaining 85% in security receipts to be paid upon recovery. The asset reconstruction company offered INR 270 crore for the INR 988 crore debt, providing lenders with a recovery of 27% of the total debt.
In response to NARCL's offer, lenders have called for counter offers from other asset reconstruction companies. A notice issued by BoB Caps does not name NARCL as the primary bidder.
The total debt owed by the company to lenders amounts to INR 988 crore, including a principal debt of INR 543 crore. Major debt holders include Punjab National Bank (INR 264 crore), Indian Overseas Bank (INR 210 crore), and Central Bank of India (INR 118 crore). Other lenders involved are Bank of Baroda, India Infrastructure Finance Company (IIFCL), and Canara Bank.
Ludhiana Talwandi Toll Road Pvt Ltd (LTTRPL) is a joint venture, with Essel Infraprojects owning 74% and Pan India Network owning 26%. In 2011, the National Highways Authority of India granted LTTRPL the task of building a four-lane highway on NH-95, aiming for completion by September 2014. NHAI signed a 29-year concession agreement starting on March 26, 2012.
IIFCL holds senior debt of INR 69 crore and junior debt of INR 149 crore. The institution has filed an application with Delhi's Debt Recovery Tribunal to recover INR 174 crore, backed by a guarantee from Essel Infraprojects on behalf of the Ludhiana Talwandi Toll Road project.
The developments around NARCL's offer and the debt associated with Essel Infraprojects' road project will continue to be closely monitored by industry observers and stakeholders.
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