Lenders to Reliance Naval seek EoIs for sale

NEW DELHI: Lenders of Reliance Naval and Engineering Ltd (RNEL), a part of Reliance Group, have sought expressions of interest from buyers for the sale of private shipbuilder under the Insolvency and Bankruptcy Code.

RNEL was admitted for insolvency proceedings on January 15 by the Ahmedabad bench of the National Company Law Tribunal.

The last date for submission of expressions of interest (EoIs) is June 27, while the final list of prospective resolution applicants will be issued on July 17, according to an EoI offer notice issued by the resolution professional (RP).


Companies with a minimum net worth of Rs 600 crore and a consolidated group turnover of at least Rs 2,000 crore can bid for the company, it said.

The eligibility for financial institutions and private equity investors is Rs 1,000 crore of minimum assets under management.

The company is being sold to recover outstanding loans of Rs 43,587 crore. Of this, the RP has admitted Rs 10,878 crore of dues of financial creditors, and another Rs 32,693 crore is under verification.

Operational creditors have claimed another Rs 1,922 crore from the company, of which only Rs 485 crore has so far been admitted by RP, the document said.

Despite having the state-of-the art facility at Pipavav in Gujarat, RNEL shipyard has been facing severe headwinds since 2013 due to the lack of orders from the Defence Ministry. The shipyard has been in a lot of stress leading to a significant reduction in operations as compared to its capacity.

According to an analyst, the bankruptcy process for RNEL will have no impact on its promoter company Reliance Infrastructure (RInfra) because, while finalising its audited accounts for March 2019 RInfra has already provided for its investment in RNEL.

When contacted, RNEL spokesperson declined to comment.

Last month, the government had announced raising of foreign investment limit in defence manufacturing to 74 per cent under the automatic route from 49 per cent to give a boost to the domestic defence industry.

An industry expert said it will be very tough for lenders to find buyers for RNEL under the ongoing process as in the past, two private shipbuilders had failed to attract any buyer during their bankruptcy process.

In the absence of any buyer, ABG shipyard with a total debt of Rs 20,000 crore and Bharti Shipyard with its Rs 13,000 crore debt had to go for liquidation.

This low interest in private shipbuilders is due to lack of orders from the government, he explained adding the government has not placed any significant orders with the Indian private shipyards, leading to severe stress for them.

Lack of orders also forced L&T to merge its L&T Shipbuilding, including Kattupalli Shipyard with itself last year.

The last date for submission of resolution plan for RNEL is August 6, and the plan is expected to be submitted to the bankruptcy court for approval on September 5, the offer document said.