State Bank of India (SBI) on Tuesday put on sale eight non-performing accounts (NPAs) worth Rs 3,948 crore on sale, including its exposures to Jai Balaji Industries (Rs 859 crore), Ballarpur Industries (Rs 47 crore) and Rohit Ferro Tech (Rs 1,320 crore). All eight assets are being offered on a 100% cash basis, with haircuts ranging between 36% and 67% for seven of them. For one account — Modern India Concast — SBI has set a reserve price 27% higher than its outstanding of Rs 71 crore.
Jai Balaji was one of the 29 firms listed by the Reserve Bank of India in its second list of large accounts sent to banks in August 2017. Earlier this year, SBI had filed an insolvency plea against the firm in the Kolkata branch of the National Company Law Tribunal (NCLT).
The reserve price for the Jai Balaji account has been set at Rs 284 crore, implying that SBI is prepared to take a haircut of up to 67%. In a report earlier this year, CLSA had estimated that the resolution of Jai Balaji through the insolvency route would entail a 69% haircut for its lenders.
In a public notice inviting bids for the eight NPA accounts, SBI said it would not transfer the personal guarantees of Jai Balaji’s promoter directors to the buyer of the asset. This is the second time SBI is trying to sell its exposure to Jai Balaji since October 2017. UCO Bank and Allahabad Bank were reported to have sold their entire exposure worth Rs 1,440 crore to Edelweiss Asset Reconstruction Company in December 2017 at a 63% haircut, with an upfront cash component of 15%.
Earlier this month, three public-sector banks (PSBs) — Punjab National Bank (PNB), Andhra Bank and United Bank of India (UBI) put on sale NPAs worth Rs 4,441 crore. Among the accounts being sold by Andhra Bank are Visa Steel and road projects from the Transstroy group, both of which were part of the RBI’s second list.