Lenders to Anrak Aluminium, one of the 28 companies in the Reserve Bank of India’s second list of corporate defaulters, have so far recovered Rs 400 crore out of the total one-time settlement plan of Rs 1,275 crore, sources close to the development told FE. The company owes about Rs 5,200 crore to its lenders, bankers said. The consortium of banks, led by State Bank of India (SBI), had approved the one-time settlement plan that entails a haircut of about 75% for the lenders, in December last year. Some of the other banks in the consortium include Canara Bank, Punjab National Bank, Union Bank and Bank of Baroda.
“The company has paid us Rs 400 crore in two tranches. We are hopeful we will recover the full amount as per the plan,” a banker said on conditions of anonymity. The bankers also have the option to restart insolvency proceedings against Anrak Aluminium at the National Company Law Tribunal (NCLT) if the company defaults on the remaining payment. The Hyderabad High Court stayed the insolvency proceedings against Anrak in March this year, after the company challenged the insolvency petition. SBI had filed the insolvency petition against Anrak Aluminium after the Reserve Bank of India (RBI) refused to approve the one-time settlement plan.
However, the High Court said banks would have the option to restart insolvency proceedings if the company defaulted on payments. “The one-time settlement plan was approved by the bankers on December 12, 2017. The first installment was delayed beyond December 13, because of which the RBI did not approve the plan and directed SBI to file an insolvency petition against the company,” the banker quoted above added.
The RBI had given bankers time till December 13, 2017 to finalise and start the restructuring process for defaulters in the second list, failing which the companies were to be taken to the NCLT. Anrak Aluminium is a joint venture between India’s Penna group and UAE’s Ras Al Khaimah Investment Authority (RAKIA), which had proposed setting up an aluminium refining plant and smelter at Visakhapatnam in 2007.
However, it ran into rough weather after the Andhra Pradesh government decided to cancel the agreement that the Andhra Pradesh Mineral Development Corporation had entered into with Anrak Aluminium to supply bauxite, the key raw material required to produce aluminium. Hence, the company could not start production despite its plant being ready in 2013.
Anrak Aluminium had approached the NCLT seeking insolvency after the Andhra Pradesh government cancelled the bauxite agreement. It had also served an arbitration notice to the Indian government and the Andhra Pradesh government, asking them to either fulfill the commitment to supply bauxite or pay compensatory damages on its investment.