NARCL improves offer for Vidarbha Industries Power

The government-promoted asset reconstruction company has given an improved counteroffer to lenders for acquiring the loans of Anil Ambani-promoted Vidarbha Industries Power, two people aware of the development told ET.

The National Asset Reconstruction Company Ltd (NARCL) offered ₹1,150 crore for the power company against an offer of ₹1,000 crore from CFM ARC, the people said.

The offer comes amid a landmark Supreme Court order that dismissed Axis Bank's petition to admit the company into insolvency stating that the tribunal, which approved admitting the company, should have factored in external factors that led to delay in payments by the defaulting borrower.


The offer by NARCL is a combination of 15% cash and 85% as security receipts, while that from CFM ARC is an upfront cash payment subject to all lenders agreeing to sell the debt.

NARCL did not respond to ET's request for comments.

A rating report by ICRA issued on February 1 stated that the company has short-, long term loans and non-fund-based limits of ₹3,264 crore rated by them. The rating agency has assigned D rating and categorised the account as issuer not cooperating.

If the outstanding loans as rated by Icra are considered, lenders' recovery on NARCL offer would equates to 35% while the recovery from the CFM ARC offer is 30%.

The annual report of Vidarbha Industries for FY22, however, shows outstanding loans of ₹1,550 crore. Axis Bank, State Bank of India, Bank of Baroda, Canara Bank, Punjab National Bank and Bank of Maharashtra are lenders to the company.

The offer from these two ARCs has stoked expectations of a quick recovery for lenders disheartened with the Supreme Court order rejecting a plea to admit the company despite a default.

Also, if lenders accept NARCL's offer, their recovery would be higher on a per megawatt basis for Vidarbha than that made in some of the recent distressed power company sales.

NARCL's offer equates to a recovery of ₹1.88 crore per megawatt for Vidarbha Industries, which has two power-producing units of 300mw each. As against this, the lender's recovery on the sale of Monnet Power was ₹39 lakh per mw while that on the sale of Athena Chhattisgarh Power was ₹47 lakh per mw. Jindal Power and Steel and Vedanta acquired the distressed power producers, respectively, under liquidation.

Anil Ambani-promoted Reliance Power holds 74% and Rosa Power Supply Company owns the remaining 24%. It has two coal power plants in the state of Maharashtra. Both the plants are not operational since January 2019.

"This was due to protracted delays in issuing regulatory orders and lack of fuel supply for one of the units," said the rating report by ICRA.