Arcil takes over Sharp Industries reins

The Asset Reconstruction Company of (India) Ltd (Arcil) has taken over control of the management of a Mumbai-based packaging company Sharp Industries Ltd. This is the first instance of Arcil taking over the management of a company.

The existing management of the company is being retained to run the day-to-day operations of the company. Arcil may decide to sell the stake now or later depending on the performance of the company, said Arcil officials.

Sharp Industries owes Rs 200 crore (principal and interest) to a consortium of banks and institutions which includes ICICI Bank, State Bank of India, Bank of India, Exim Bank, Development Credit Bank, IIBI, UTI, LIC, Bank of Bahrain and Kuwait and Federal Bank.

Arcil has bought out over 80 per cent of the secured debt of the company from ICICI Bank, State Bank of India, Development Credit Bank, Bank of India and aims to recover the entire amount. Arcil is planning to adopt this route of resolution of accounts in about 14-15 companies, said Arcil officials.

As a part of the restructuring package, Arcil has converted a part of its debt into equity of the company entitling it to at least 51 per cent voting rights in the company. It has also restructured remaining loan to the company and at a reduced the interest rate to of 9 per cent from over 17 per cent.

According to banking sources, the company is expected to turn around and perform well given the upturn in the FMCG sector which typically fuels the packaging industry's growth.

Sharp Industries is being transformed from a company that undertakes outsourced work to acquiring orders for itself. The company has recently got on its own accord a Rs 12 crore domestic order and a Rs 24 crore export order. The company currently has a turnover of Rs 10-11 crore which is being scaled up.

Recently Arcil also successfully conducted an auction of securitised asset, Core Healthcare. Following which Nirma has entered into an arrangement whereby it will conduct a due diligence of the companies businesses and purchases some of them. Through this purchase a part of Core Healthcare's Rs 900 crore due to various lenders is expected to be repaid.