Omkara Asset Reconstruction Company, which has gross assets under management (AUM) worth nearly Rs 16,000 crore, has acquired stressed assets worth Rs 750 crore from two entities, comprising a total of over 4,000 retail accounts. With Rs 2,000 crore in stressed assets already acquired during the current financial year, Omkara expects to surpass its annual target of acquiring Rs 4,000 crore non-performing assets (NPAs) by the end of March.
“We have acquired stressed assets worth around Rs 650 crore from JM Financial ARC having nearly 3,100 accounts. We have also acquired NPAs worth Rs 100 crore from an NBFC,” said Manish Lalwani, MD & CEO, Omkara ARC. “These both are secured retail mortgaged properties,” he added.
ARCs typically prefer secured stressed assets over unsecured ones due to their higher recovery potential. According to industry estimates, the recovery ratio from stressed assets can go up to 60-70%. However, in case of unsecured stressed assets the recovery ratio is around 10%.
One of the advantages of acquiring retail stressed assets is their predictable and regular recovery process.
“We see a growing opportunity in the retail stressed asset space, particularly as lenders increasingly look to offload NPAs to clean up their balance sheets. Retail stressed portfolios generate consistent cash flow, and the recovery turnaround is faster,” said Lalwani. “Our strategy is to remain agile and focus on sectors and portfolios where we can deliver value for both our investors and stakeholders,” he said.
Recovery from corporate stressed portfolios tends to take longer. Corporate NPAs require resolution through mechanisms such as restructuring, the Insolvency and Bankruptcy Code (IBC), or the SARFAESI Act, which involve extensive legal proceedings and delays.
The company is expected to surpass the annual target of acquiring stressed assets worth Rs 4,000 crore.
“Over the past three years, we have been acquiring stressed assets worth Rs 4,000 crore annually. This year, we have already reached the halfway mark with Rs 2,000 crore in acquisitions across corporate and retail segments,” said Lalwani. “Considering the current trend and pipeline, I am hopeful we will not only meet but also exceed this target by the end of the financial year,” he added.
Omkara ARC came into the limelight this year after it won the bid in August to acquire NPAs from the Stressed Asset Stabilisation Fund (SASF) for around Rs 650 crore.