ADANI may acquire JAL: Interesting facts

 AEL may acquire JAL: 
Interesting facts put together

Fact 3: National Asset Reconstruction Company Ltd. (NARCL) led Committee of Creditors (CoC) approved Adani Enterprises Ltd's (AEL) bid of ₹ 12731 Cr. (total resolution plan value app. ₹ 14535 Cr.) to acquire debt-ridden Jaiprakash Associates Ltd.(JAL), though Vedanta Group offered ₹ 16000 Cr. AEL's offer of an upfront cash payment of ₹ 6005 Cr. and payment of balance amount over two years thereafter, appear to have found favour with CoC as against the offer of Vedanta, which offered an upfront cash payment of ₹ 3800 Cr. and paying the balance amount over five years. NARCL has the highest exposure of ₹ 49,119 Cr., followed by Asset Care & Reconstruction Enterprise (ACRE) (₹ 2,315 Cr.) and the two ARCs together hold nearly 90% of the total voting share in the CoC. Creditors' total exposure to JAL was ₹ 57185 cr. The offer of AEL works out to 22% of the total exposure.

Fact 1: A new National Asset Reconstruction Company (NARCL), a government entity, was set up in July 2021 to acquire and manage existing stressed assets of Public Sector Banks (PSBs), aggregating ₹ 2 lac Cr. (in line with the 2021 fiscal budget speech made by the present Finance Minister). NPAs with aggregate outstanding in excess of ₹ 500 Cr. to the banking system, where at least 85-90% provision is already made in the banks’ books, were also identified for take-over by  NARCL later. (As per newspaper reports, at that time, 22 stressed assets totaling ₹ 82,500 cr. were already in the list). Incidentally majority stake in NARCL are being held by the PSBs and the balance by the private banks. Canara Bank is the sponsor bank. 

Fact 2: JAL was part of the list of companies identified by RBI in August 2017 for reference to National Company Law Tribunal (NCLT) for resolution/liquidation by the lender banks. NARCL was the sole bidder in March 2025 to acquire the assets of JAL from 25 lender banks, led by SBI, the offer amount being ₹ 12000 Cr. NARCL made the offer on a 15:85 (cash: security receipt) basis and the anchor bid would translate into a recovery of 22% for the lenders.(Initially the offer amount was ₹ 10,000 Cr. but NARCL upped its offer to ₹ 12,000 Cr. subsequently). Apart from SBI, ICICI Bank, IDBI Bank, LIC of India, Axis Bank were the other entities that had major exposures, which turned into NPA/NPI later on. 

Now please read Fact 3 again to get a full picture from the beginning. It may also help to understand how large exposures, not getting bids from the investors initially, are routed through ARCs, to find an ultimate resolution, invariably with huge hair-cuts

I have no comments to offer than raising the following:

1. AIBEA, one of the major bank employees' unions, is in the forefront in pointing out that huge amounts are written-off by PSBs year after year. (Please see the box below). The normal response that we hear in the Parliament is that write off is only a technical exercise carried out in the books of the bank and the case against the borrower continues. Here, in this case, the actual write off amount for the lenders/investors (as per Fact 2 above) is 78%. 

2. Normally the resolution value of the assets offered through NCLT fetches a better price than the liquidation value. In a huge exposure of more than ₹ 50,000 cr. if only 23% could be realized through a resolution, the implied meaning is that the expected liquidated value is less than that amount. Is it a case of diversion of funds or assets were not created or the exposure was unsecured abinitio? Were the accounts declared as 'fraud'?

3. RBI asked the lenders to refer JAL to NCLT in August 2017. NARCL, the ARC, acquired it in January 2025. Now the bid accepted by CoC for the assets of JAL is ₹ 12731 Cr., which amount translate into higher NAV than the other bid amount. Public memory is too short to remember that the lenders, and not the ARCs, suffered the huge haircuts ultimately.  

Regards

V.Viswanathan
CGM Retd. e-SBT

21st November 2025