Three FIs rope in consortium to sell sticky assets of defaulters

Nisha Das
26 February 2003

Mumbai: Leading financial institutions (FIs) like Industrial Development Bank of India (IDBI), Industrial Financial Corporation of India (IFCI) and Hyderabad Bank have roped in Armedas, a Mumbai-based financial consortium, to sell the sticky assets of their defaulters to be acquired under the Securitisation Act.

The FIs and the bank have asked Armedas to start proceedings to acquire and sell assets of their four major defaulters in Ahmedabad, Chennai and Andhra Pradesh as early as possible. The total worth of these assets are estimated at over Rs 500 crore.

Armedas is a financial consortium that includes Megharaj Financial Services (an investment bank), Dalal Mott MacDonald, NA Shah Associates and Chesterton Meghhraj Property Consultant. They will assist the lenders to acquire the assets of the defaulters and to sell the same to a third party.

The consortium will also provide a comprehensive and complete range of asset valuation and recovery services under the Securitisation Act. Armedas is made up of functional specialists with expertise in the fields of investment banking, debt restructuring and partner search.

Says Meghraj Financial Services managing director A S Anand Kumar: “Currently we are working on four different asset acquisition projects for IDBI, IFCI and Hyderabad Bank — two in Ahmedabad, one in Chennai and the other in Hyderabad. Three more projects are in the offing.” He is, however, reluctant to reveal the names of these defaulters.

He says the effectiveness of similar kinds of consortium has been increasing by the promulgation of the Securitisation Act, which enables FIs and banks to seize the assets of defaulters and recover their dues by hawking their assets. The bad debts of banks now total over Rs 1,10,000 crore.