Banks sell Arshiya exposure worth Rs 1,120 cr to ARC

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Published: May 7, 2015 12:09:03 AM

Lenders to logistics firm Arshiya, including State Bank of India and its subsidiaries, have sold close to R1,120 crore...

Lenders to logistics firm Arshiya, including State Bank of India and its subsidiaries, have sold close to R1,120 crore of their exposure to Edelweiss Asset Reconstruction Company, sources told FE.

In 2013, the company had sought a debt recast through the corporate debt restructuring (CDR) mechanism, which was approved in mid-June last year. Senior bankers familiar with the sale said the loans were sold at a discount of 50% and added that a remaining chunk of R1,680 crore was put on the block.

For three months to December, Arshiya reported a loss of R116 crore, having paid out R94.12 crore as interest. The company’s revenues fell by nearly 50% y-o-y to R85.56 crore. Arshiya’s net debt at the end of Q3FY15 stood at R2,773 crore, according to Bloomberg data.

In its FY14 annual report, Arshiya had said that it sought CDR to contain high finance costs so that cash flows could be channelised to operations. “To effectively service the borrowings and, at the same time, make resources available for day-to-day operations, the company thought it advisable to undertake a CDR whereby the company’s obligations to pay interest and principal on borrowings have been deferred by availing certain concessions like moratorium,” it had said.


Meanwhile, lenders sold non-performing assets (NPAs) worth R20,000 crore to asset reconstruction companies (ARCs) in FY15, about a fourth of the R90,000 crore put on sale.

In FY14, banks had wanted to offload assets worth R40,000 crore, but ARCs picked up loans worth R22,000 crore.
Last year, the Reserve Bank of India had asked ARCs to increase the mandatory upfront investment in security receipts (SRs) to 15% from the earlier 5% to ensure ARCs have ‘more skin in the game’. The shares of the company have risen sharply in 2015 and are trading at levels of R40.

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