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RELIANCE NAVAL: Put Up for Sale Under Insolvency Process

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BloombergQuint reports that lenders of Reliance Naval and Engineering Ltd., part of Anil Ambani’s Reliance Group, have sought expressions of interest from buyers for the sale of the private shipbuilder under the Insolvency and Bankruptcy Code.

The company is currently facing insolvency proceedings at the Ahmedabad bench of the National Company Law Tribunal.

The last date for submission of EoIs is June 27, while final list of prospective resolution applicants will be issued on July 17, BloombergQuint discloses citing an offer notice issued by the firm’s resolution professional.

According to BloombergQuint, companies with a minimum net worth of INR600 crore and a consolidated group turnover of at least INR2,000 crore can bid for the company. The eligibility for financial institutions and private equity investors is INR1,000 crore of minimum assets under management.

The last date for submission of resolution plan for Reliance Naval is Aug. 6. The plan is expected to be submitted to NCLT Ahmedabad for approval on Sept. 5, the offer document said, BloombergQuint relays.

BloombergQuint relates that the company is being sold to recover outstanding loans of INR43,587 crore. Of this, the resolution professional has admitted INR10,878 crore of dues of financial creditors and another INR32,693 crore is under verification.

Operational creditors have claimed another INR1,922 crore from Reliance Naval, of which only INR485 crore has so far been admitted by the resolution professional, the offer document stated, adds BloombergQuint.

Despite having a state-of-the-art facility at Pipavav, Gujarat, Reliance Naval was facing severe headwinds since 2013 due to a lack of orders from the defence ministry, the report notes. The shipyard has been in a lot of stress leading to a significant reduction in operations as compared to its capacity.

According to an analyst, Reliance Naval’s bankruptcy process will have no impact on its promoter company Reliance Infrastructure Ltd. In its audited accounts for March 2019, the company had provided for its investment in Reliance Naval, BloombergQuint says.

About Reliance Naval

Reliance Naval and Engineering Limited designs and constructs warships and submarines. The Company offers offshore patrol and research vessels, frigates, corvettes, aircraft carriers, and destroyers, as well as piping, propeller, trilshaft, rudder, coating, and machinery repair and maintenance services. Reliance Naval and Engineering serves oil and gas sectors worldwide.

As reported in the Troubled Company Reporter-Asia Pacific on Jan. 22, 2020, The Hindu said that the Ahmedabad bench of the National Company Law Tribunal (NCLT) has admitted an application against Reliance Naval and Engineering Limited (R-Naval) for insolvency.

“The application by IDBI Bank Ltd. for a claim of INR1,159.43 crore before the NCLT Ahmedabad bench has been admitted,” R-Naval said in a filing with the exchanges.

This is the second Reliance Group firm to go for insolvency after Reliance Communications, the Hindu disclosed. The company had total outstanding dues of INR9,534 crore as on December 31, 2019. It reported a net loss of INR340 crore on net sales of INR20.5 crore for the second quarter ended September 30, 2019.

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