With Rs12,000 cr debt, bankrupt IVRCL may be sold piecemeal

IVRCL Ltd, one of India's largest engineering and construction companies for which the debt resolution process has just begun, might have to be broken up and sold if the creditors are to successfully oversee a resolution process, according to a DNA report citing sources.

As the Hyderabad-based firm is one of the most recognised and respected names in project execution, lenders and creditors are uncomfortable with its liquidation, the report adds.

It was earlier reported that State Bank of India has taken the debt-laden firm to the National Company Law Tribunal.

The Hyderabad branch of the NCLT, while admitting the SBI petition against IVRCL – which is among 28 accounts on the Reserve Bank of India list of large non-performing assets- appointed Sutanu Sinha as the interim resolution professional.

Henceforth, the management of affairs of the corporate debt and all other affairs vest in the IRP, with the board's powers suspended.

According to SBI, as of October 2017, Rs604 crore is due from IVRCL to the bank.

According to the DNA report, one possible reason for breaking up the entity is the mammoth size of the dues which, as per initial estimates, have touched Rs12,000 crore.

BDO India, the Indian arm of Belgium-based audit and consultancy major, which has also been entrusted with the forensic audit of Nirav Modi case, has bagged the IVRCL mandate, DNA's sources said, though according to rules, the assignment had to be given to a single professional from the organisation.

"The company might have to be sold by forming different asset sets to attract potential bidders. We believe proper regulatory environment would support it. The size is big and the aggregate claims by creditors are likely to touch Rs12,000 crore for the whole entity," sources said.

At present, the company, with assets spread across the country, has around 28 subsidiaries and special purpose vehicles for different projects, excluding its stakes in two toll-way projects sold in December.

It also owns a 55-per cent stake in listed entity Hindustan Dorr-Oliver.

Creator of major infrastructure projects like pipelines, canals, roads, country's largest desalination plant or the 70-acre campus for the Securities and Exchange Board of India's National Institute of Securities Markets at Patalganga in Maharashtra, VRCL had fallen on bad times following poor revenues and cash generation, leading to loan defaults in 2015 after running up a debt of Rs10,000 crore.

Since then, it has sold off several assets like two toll roads in Tamil Nadu to Singapore-based Cube Highways in December.

"The whole process of managing the insolvency process would need 35-40 professionals to complete activities like due-diligence, verification of assets, compliance, forensic examination and other related work. Handling a surge of 5,000 claims expected since the publication of the notice during the weekend, valued at Rs12,000 crore, would be another challenge," sources said.