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Wednesday, July 24, 2024

NARCL Proposes ₹270 Crore for Pink City Expressway; Expected Recovery Pegged at 15%

The National Asset Reconstruction Co (NARCL), a government-backed bad loan aggregator, has presented a ₹270 crore offer for Pink City Expressway Private Limited (PCEPL). PCEPL was established to construct, operate, and maintain the six-lane Gurugram-Kotputli-Jaipur section of the Delhi-Jaipur highway.

With ₹1,761 crore in outstanding loans and ₹30 crore in bank guarantees, PCEPL, according to the rating agency Care, suggests that lenders could recover approximately 15% of their claims through NARCL. The bad bank acquires loans by paying 15% of the amount in cash and the remaining in security receipts (SRs), guaranteed by the government for five years. These SRs can be invoked by banks in the event of resolution or liquidation of the bad loan.

“The PCEPL offer was finalized last week after NARCL completed all its financial and legal due diligence. Individual banks have to approve the transaction for it to be completed,” said an anonymous source familiar with the process. NARCL did not respond to ET’s emailed queries as of press time.

IDBI Bank, along with Canara Bank, IFCL, and State Bank of India (SBI), leads the approximately dozen banks involved in the project. This offer represents the first from NARCL in over four months and follows changes in the top management of the bad bank.

PCEPL, a joint venture involving Emirates Trading Agency from Dubai, KMC Group of Hyderabad, and IKSHU Infrastructure, faced termination of its 12-year agreement due to delays, leading NHAI to take over the project. This road asset proposal indicates a shift in NARCL’s strategy, previously envisioned as an aggregator of large bad debts in the banking system.

“There is now a concentrated effort to push through the takeover of assets which have long been in the pipeline. PCEPL has been marked as NPA since 2020, and there has been no other option for banks to recover their dues. NARCL is hoping to expedite recovery through arbitration claims pending with the NHAI,” stated another source familiar with the matter.

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