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Daewoo hauled to the block

Mumbai, Nov. 22: A day after the Lok Sabha cleared the Bill to hasten recovery of bad loans, bankers swooped on Daewoo Motors India (DMIL) after a tribunal allowed them to sale of assets at its Surajpur plant.

After the Lok Sabha gave the go-ahead to the Securitisation Bill yesterday, banks are now gearing up to seize defaulters’ assets even as the Bill awaits a nod from the Upper house and the President.

Though most bankers expect these approvals to come through in the days ahead, they say things are likely to move at a feverish pace once they get the green signal as the mandatory 60-day notice period has expired in many cases.

Under the Ordinance, once notices are issued to errant companies, banks have 60 days after which they can decide either to sell the assets of an errant company or change its management. This decision has to be endorsed by around 75 per cent of the lenders in terms of value.

The Debt Recovery Tribunal (DRT) has invited offers for the purchase of DMIL’s property in Surajpur not later than December 18. The unit has the capacity to manufacture one lakh cars per annum.

Some of the aggrieved lenders in this case are ICICI Bank, Industrial Development Bank of India (IDBI) and Exim Bank. Reports say that ICICI Bank had earlier appealed to the DRT for permission to sell DMIL’s assets. Banks and financial institutions have an exposure of over Rs 970 crore in the company that has an accumulated loss of Rs 300 crore.

The DRT added that while the DMIL properties at Surajpur will be open for inspection between December 2 and 14, the meeting to consider offers received will be held in Mumbai on December 19.

Domestic financial institutions were hit hard when General Motors Corporation, which acquired Daewoo’s assets in Korea and other countries, decided to keep the Indian operations out of the deal.

The FIs are reported to have earlier sounded majors that included Telco, Maruti Udyog and Hyundai Motors for taking over DMIL’s facilities. But the response was lukewarm as these players have already invested substantial amounts in setting up large manufacturing facilities.

“The passage of the Securitisation Bill is a shot in the arm for banks and financial institutions. Banks and recovery agents assisting them are now gearing up to recover bad loans,’’ said B. R. Parthasarathi, general manager, Bank of India (BoI).

The bank has incidentally despatched more than 200 notices to defaulting companies.

The nod to the Bill given by the Lower house was also well received by the stock exchanges today with most of the banking scrips recording handsome gains. For instance, ICICI Bank soared by over 6.5 per cent to end the day at Rs 128.55 while State Bank of India (SBI) jumped over 3.20 per cent to Rs 248.15.

Other prominent gainers included Bank of Baroda (BoB) which closed at 4.50 per cent, BoI by 4.20 per cent to Rs 29.70, Punjab National Bank by 3 per cent and Corporation Bank, which saw a rise of over 3.20 per cent to Rs 104.75.

Analysts contended that though the passage of the Bill is a welcome move, its benefit would only be reflected on balance sheets of banks and financial institutions from next fiscal.

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