Shipbuilding: Reliance Naval lenders seek EoIs for sale

NEW DELHI: Lenders of Reliance Naval and Engineering Ltd (RNEL), part of the Reliance group, asked buyers to express interest in selling a private shipbuilder under the Insolvency and Bankruptcy Code .

The RNEL was admitted into bankruptcy proceedings on January 15 by the Ahmedabad chamber of the National Company Law Tribunal.

The deadline for submitting expressions of interest (EoI) is June 27, while the final list of potential resolution candidates will be published on July 17, according to an EoI offer notice published by the resolution professional ( RP).

Businesses with a minimum net worth of Rs 600 crore and a consolidated group turnover of at least Rs 2,000 crore can bid for the business, he said.

Eligibility for financial institutions and private investors is Rs 1,000 crore minimum assets under management.

The company is sold to recover outstanding loans of Rs 43,587 crore. Of this total, the RP admitted Rs 10,878 crore in contributions from financial creditors, and another Rs 32,693 crore is being verified.

Operational creditors have claimed another Rs 1,922 crore from the company, of which only Rs 485 crore has so far been admitted by RP, according to the document.

Despite Pipavav’s state-of-the-art facility in Gujarat, the RNEL shipyard has faced severe headwinds since 2013 due to lack of orders from the Defense Ministry. The shipyard was under a lot of stress, resulting in a significant reduction in operations relative to its capacity.

RNEL bankruptcy proceedings will have no impact on its promoter company, analyst says

(RInfra) because, by finalizing its audited accounts for March 2019, RInfra has already planned its investment in RNEL.

Contacted, the RNEL spokesperson declined to comment.

Last month, the government announced an increase in the limit on foreign investment in defense manufacturing to 74 percent as part of the 49 percent automatic path to boost the domestic defense industry. .

An industry expert said it would be very difficult for lenders to find buyers for RNEL as part of the ongoing process because in the past two private shipbuilders had failed to attract any buyers during their bankruptcy proceedings.

In the absence of any buyer, the ABG shipyard with a total debt of Rs 20,000 crore and the Bharti shipyard with its debt of Rs 13,000 crore had to be liquidated.

This low interest in private shipbuilders is due to the lack of government orders, he explained, adding that the government had not placed any large orders with Indian private shipyards, which caused them severe stress. .

The lack of orders also forced L&T to merge its L&T Shipbuilding, including Kattupalli Shipyard, with itself last year.

The deadline for submitting the resolution plan for RNEL is August 6, and the plan is expected to be submitted to the bankruptcy court for approval on September 5, according to the offer document.

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