State Bank of India (SBI) has sold its exposure in KSK Mahanadi Power Company Ltd to Aditya Birla ARC Ltd for ₹1,622 crore on 100 per cent cash basis.

India’s largest bank had fund-based exposure (principal and interest relating to term loan and cash credit) aggregating ₹5,042.53 crore as of July 8, 2022.

Going by the recovery made from the sale and the outstanding fund-based exposure, the bank has taken a haircut of about 68 per cent.

Prior to the sale of its fund-based exposure, SBI had the biggest exposure to KSK Mahanadi Power Company, followed by Aditya Birla ARC (₹4,732.62 crore). After acquiring SBI’s exposure, the ARC will have the single largest exposure to the company.

SBI had initiated an open offer through an e-auction towards sale of its fund-based exposure to KSK Mahanadi Power Company Ltd on 100 per cent cash basis on April 20, 2022, for a reserve price of ₹1,544.08 crore.

“While we received 15 Eols (expression of interest), only one bid was received from Aditya Birla ARC Ltd. for an amount of ₹1,544.08 crore on date of auction - May 30, 2022.

“A Swiss challenge process was also initiated on May 31, 2022, based on offer received from Aditya Birla ARC Ltd...No competing bid received under Swiss challenge on June 21, 2022,” said SBI in a regulatory filing.

The bank said based on subsequent discussions, Aditya Birla ARC Ltd, improved the offer to ₹1,622 crore. Thereafter, approval from competent internal authorities was obtained and assignment concluded on August 12, 2022.

“We are of the opinion that the resolution strategy adopted is optimal at this juncture,”per the filing.

SBI emphasised that transfer of stressed loans is in line with the bank’s policy and regulatory guidelines and is in nature of normal business activity for reduction of non-peforming assets.

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