Pipavav Shipyard may be sold by March 10; lenders stare at 90-95% haircut
NEW DELHI: India’s largest drydock Pipavav Shipyard is likely to be sold by March 10 this year at a price that would require the lenders to take a 90-95% haircut. Reliance Naval and Engineering Ltd (RNEL), the present owner of Pipavav Shipyard, has been undergoing Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC) since January 2020.
The lenders are currently voting on bids by Hazel Mercantile-Swan Energy consortium and Navin Jindal-owned JSPL. The voting on proposals of these two companies started on February 25, 2022 and is likely to end around March 10, 2022.
Sources said the net present value of Hazel-Swan plan is estimated around Rs 1,200 crore and that of JSPL is around Rs 700 crore. RNEL owes Rs 12,400 crore to lenders. Hence, total recovery for the lenders under the Hazel- Swan plan would be 9.8% and under JSPL plan 5.6%, resulting in a haircut of 90% to 95% for lenders. Sources said some lenders had raised the issue of eligibility of one of the bidders -- Hazel-Swan consortium.
Swan Energy, owned by Mumbai-based businessman Nikhil Merchant, holds 74% stake in the special purpose vehicle set up with Hazel Mercantile to bid for RNEL. According to reports, Nikhil Merchant was a director on the board of the Navi Mumbai Smart City Infrastructure Ltd, which has defaulted on bank loans and those loans have been classified as a non performing asset (NPA) by the banks.
Merchant was on the board of this company from 2015 to till December 2021, and he resigned much after submitting the resolution plan for Pipavav Shipyard. Similarly, the question of eligibility of Minesh Shah, a director on the Board of Hazel Mercantile Limited, was also raised by some lenders. Shah reportedly continues on the board of various companies of HDIL Limited, another wilful defaulter.