Public sector lender Punjab National Bank (PNB) has put its loans to Bharati Shipyard and Electrotherm (India) for sale to asset reconstruction companies (ARCs), sources told FE. The bank’s exposure to Bharati Shipyard stands at Rs 482 crore and to Electrotherm at Rs 308 crore.

PNB had so far stayed away from offloading loans to ARCs following valuation concerns, but has of late put over Rs 5,000 crore on the block. The corporate debt restructuring (CDR) package of Bharati Shipyard and Electrotherm had failed in Q1 FY15.

In July last year, a consortium of banks led by State Bank of India (SBI) sold 60% of its loans to Bharati Shipyard to Edelweiss ARC. Eleven lenders out of 23 had sold their debt amounting to Rs 4,800 crore. Bharati’s debt was referred to the CDR cell in December 2011 and lenders had agreed to recast the loan in April 2012, and had offered a moratorium on interest for 18 months along with a reduced interest rate of 11%.

In Q4 FY15, the company had posted a net loss of Rs 540 crore. In FY14, it had reported a net debt of Rs 5,393 crore.

The company is promoted by managing directors Vijay Kumar and Prakash Chandra Kapoor, who hold 11.38% each, and Bharti Infratech Projects that has a stake of 32%.

Electrotherm’s FY14 annual report said Bank of Baroda had sold its exposure to Edelweiss Asset Reconstruction Company on March 26. Other bankers to Electrotherm include Corporation Bank, Canara Bank and Central Bank of India.

Last year, Bank of India, State Bank of India (SBI), Bank of Baroda, UCO Bank, Vijaya Bank and State Bank of Travancore (SBT) had put on sale their loans to Electrotherm. Among them, Bank of India had the highest exposure of Rs 636 crore as a combination of term loans and working capital loans.

Debt recast
* The bank’s exposure to Bharati Shipyard stands at Rs 482 crore and Electrotherm at Rs 308 crore
* PNB had so far stayed away from offloading loans to ARCs following valuation concerns, but has of late put over Rs 5,000 crore on the block
* The CDR package of Bharati Shipyard and Electrotherm had failed in Q1 FY15
* In July 2014, a consortium of banks led by SBI sold 60% of its loans to Bharati Shipyard to Edelweiss ARC

For Updates Check Banking News; follow us on Facebook and Twitter