In the case of CCC, bankers were stunned by receiving bids of ₹ 60 crore for the total outstanding amount of ₹ 2,623 crore, which was less than 3% of the recovery for banks. The NARCL bid also dwarfed the promoter’s offer of ₹195 crore, which had envisaged a recovery of 7.5% for the banks.
Bankers were expecting better after Rainbow Papers in June offered ₹80 crore for a total outstanding of ₹1,136 crore, a recovery of just 7%. Lead Lender () NARCL is doing its own valuation post the offer.
Steel makers in meeting on third property bid Mittal Corporation Earlier this week, lenders asked NARCL to revamp their bids for assets to start the process on the right track.
“Whatever the bids that have come in, it is unlikely that banks will consider NARCL’s bids. The real fear is that with such low bids, whatever little value there is in the NARCL asset will be destroyed. A case in point is the CCC bids, which are not even a third of what the promoter offered a few months back. Banks will have to reject these bids as they are too low,” said a person familiar with the bids.
Bankers say that even the bids placed by NARCL are not on full cash payment and will include 85% security receipts, which can be encashed later. This is against the common practice of banks going for full cash settlement only.
“Even when full cash is not offered, the bids are still low. In fact this calls into question the valuation metrics used by them. One understands that claims in EPC companies like CCC And there could be rewards, for which the recovery would be uncertain and it seems as if they valued them at zero, which is why they arrived at such a low valuation,” said a second person aware of the bids.