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Priya Nair

Mumbai , June 3

RECOVERY of funds through sale of non-performing assets has become a problem for institutional lenders even after setting up an asset reconstruction company.

Among the latest instances is the Asset Reconstruction Company (India) Ltd's (Arcil) effort to find a buyer for the sick Saurashtra Chemicals, which has hit a roadblock.

More than six months after it called for bids, Arcil, dragged to court by one of the bidders for being disqualified on technical grounds, has called for fresh bids. June 17 is the cut-off date for making fresh bids for Saurashtra Chemicals.

Gujarat Heavy Chemicals Ltd (GHCL), the disqualified bidder, has also been allowed to bid, following a court order, in view of the understanding between Arcil and GHCL.

GHCL, Tata Chemicals, DCW Ltd, Nirma Ltd and JP Morgan were among the bidders for Saurashtra Chemicals.

Tata Chemicals and DCW Ltd were short-listed and allowed to do due diligence, while the bids of Nirma and GHCL were rejected.

Now, one of the short-listed bidders has threatened to pull out of the bid process. This company has alleged that since Arcil had discussed the details of the short-listed bids with lenders, the bid figures may be known to others.

Arcil put up Saurashtra Chemicals, a soda ash producing unit belonging to the Birla group, for sale in October 2004. As per the original schedule, the Saurashtra Chemicals revival deal should have been finalised by July 2005. But the court cases and the subsequent court order asking GHCL to be included in the bidding process at the last minute, have delayed the process.

GHCL went to court claiming that the bidding process deviated from the norms laid down. The Mumbai High Court rejected the plea, following which GHCL went to the Supreme Court. The Supreme Court referred the case back to the Mumbai High Court.

Subsequently, Arcil and GHCL apparently reached a compromise and the high court passed an order permitting GHCL to participate in the bidding process.

It is learnt that secured creditors did not find the bids of both Tata Chemicals and DCW up to their expectations. Following this, Arcil asked the bidders to revise their bid amount.

The two short-listed bidders are upset that GHCL has been allowed to participate in the bidding process again.

An official from one of the short-listed companies said, since the bids were discussed openly, GHCL now has an advantage. The sanctity of the bidding has been violated, he said.

Saurashtra Chemicals is one of the big deals that were being pursued by Arcil. Currently, there is a lot of interest in soda ash business, which explains the eagerness of many players for a stake in the ailing company. Clearly, nobody is willing to give up without a fight.

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