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Edelweiss Asset Reconstruction Company (ARC) plans to “set up or build” turnaround management capability to handle the affairs of large distressed companies whose debts it picks up from banks.
This may include having a cadre of “interim CEOs” tasked to run a company’s affairs till its successful revival.
Siby Antony, MD and CEO, Edelweiss ARC, said there are about 10-15 large “assets” or companies in its 500-odd assets portfolio that require such capacity. These 15 companies account for half of the ARC’s assets under management of nearly ₹22,000 crore. These are viable companies which have some management gaps that need fixing, and this goes beyond the need for mere debt restructuring or additional funding, he added.
Edelweiss ARC will provide these companies with the necessary management bandwidth after a study, said Antony, adding: “We have to ensure that the funds are utilised in the right way and only for revival. That’s why we need a turnaround management for these companies.”
The ARC is already implementing this idea in the case of Bharati Shipyard, whose debt — of ₹8,000 crore from a consortium of banks — it has picked up. It subsequently appointed Sameer Kaji as interim CEO at Bharati Shipyard.
Elaborating on the arrangements made at Bharati, Antony said: “We are not getting into the board. We only want to look at the management and day-to-day operations.
“We don’t want to disrupt anything else. We are the largest stakeholder in the company after acquiring 70 per cent of the debt. We are telling the management to do things in a particular way. This arrangement gives us direct control. So, we have asked them to form a committee of three, including the two promoters and the interim CEO, to take decisions. We need to think out of the box.”
Viable model Antony emphasised the need to retain the earlier management even while the change process is on. This would ensure a viable model for banks, ARCs and the distressed company itself, he said.
Edelweiss ARC is looking at a couple of pharma companies in its portfolio to explore the interim CEO model further, he added.
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