The prospect of reviving Reliance Naval and Engineering Ltd (RNaval), the bankrupt shipyard owned by Anil Ambani’s Reliance Group, under the Insolvency and Bankruptcy Code (IBC), is fading with three key parties opting out of the fray to buy the yard located at Pipavav in Gujarat after submitting initial bids.

Russia’s state-owned United Shipbuilding Corporation, Chowgule and Company Pvt Ltd and APM Terminals Management BV have opted out of the bidding process, according to banking sources.

Also read: Mazagon Dock still eyes RNaval yard after choosing to stay away from IBC-driven bidding process

That leaves nine bidders, mostly asset reconstruction companies (ARCs) in the fray for the yard that holds a permit from the government to build warships.

RNaval is being sold under theIBC to recover unpaid dues of ₹43,587 crore. Of this, the resolution professional (RP) has admitted ₹10,878 crore of dues of financial creditors while another ₹ 32,693 crore is under verification. Operational creditors have claimed another ₹1,922 crore from the company, of which only ₹485 crore has so far been admitted.

APM Terminals has conveyed to the RNaval RP that the company is not interested in submitting a bid as the asset cannot be used for port business and the company is not in the ship-building business.

Also read: Post defence import curbs, RNaval’s Pipavav shipyard could interest Adanis, Mahindras

United Shipbuilding is also not keen on bidding for RNaval because the company management believes that the pipeline of new defence business is not clear, with the government scrapping a contract awarded to the yard for constructing six naval offshore patrol vessels two weeks ago.

In the absence of any clear visibility of business, it does not make any sense to bid for the shipyard, United Shipbuilding has told the RP.

Chowgule Group, which has shipbuilding experience, is not agreeable to giving ₹5 crore as bid bond and ₹75 crore as personal guarantee.

With these three contenders walking out, the last date for bid submission is likely to be extended beyond October 30.

Banking sources reckon that RNaval may go the ABG Shipyard and Bharati Defence way — both were ordered to be liquidated by the National Company Law Tribunal (NCLT) in the absence of any acceptable resolution plans from bidders.

ABG Shipyard (with debt of over ₹19,000 crore) and Bharati Defence (with debt of over ₹13,000 crore) are under liquidation with lenders likely to get less than ₹800 crore and ₹600 crore, respectively

Other suitors

Hazel Mercantile Ltd, a unit of the Veritas Group, and ARCs such as ARCIL, IARC, JM ARC, CFM ARC, Invent ARC, Phoenix ARC, US-based fund Interups Inc and private equity firm Next Orbit Ventures have also expressed interest in the shipyard.

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