Srei companies, RCap may get more resolution offers

Mumbai: The fates of the two most closely watched insolvent financiers - the twin Srei companies and Reliance Capital - will likely be decided by the end of this month.

The administrator of Srei has extended the deadline for accepting the firm resolution plans to November 25, while the administrator of Reliance Capital has set a deadline of November 28.

Srei Infrastructure Finance and Srei Equipment Finance (SEFL) generated a lot of interest among potential bidders after the administrator restarted the sale process a couple of months ago. ArcelorMittal-promoted A M Mining India and Capri Global - the two late entrants - have sought longer time for due diligence and to submit a ₹50-crore earnest money deposit (EMD).

In a related development, Rajnish Sharma, the administrator of twin Srei, informed the stock exchange on November 12 about a fraudulent transaction amounting to ₹13,110 crore that he has reported to the bankruptcy court.

The notice states that the administrator received reports from "a professional agency appointed as the transaction auditor indicating that in SEFL there are transactions amounting to ₹13,110 crore which are fraudulent in nature under section 66 of the Code."

Similarly, last month, Nageshwara Rao Y, administrator of Reliance Capital, raised concerns over the loans amounting to ₹1,755 crore given by the finance company to its group companies. The notice to exchange by both the administrators - of Srei and RCap - was based on the separate transaction audit reports submitted by BDO India.

In an email response to ET, a spokesperson from Srei Foundation has refuted these allegations of fraudulent transactions. "These claims, that are yet to be validated by the tribunal and pending adjudication, stand dismissed...All transactions were genuine, having strong underlying assets through structured loan transactions which Srei has been doing for the last 32 years and are being wrongly termed as fraudulent."

The administrator of Srei has asked the resolution applicants to assign value to the transactions classified as fraudulent while submitting a plan.

Arena Investors and Varde Partners; and Shon Randhawa and Viren Shah jointly submitted a resolution plan for Srei. However, the sale process was restarted since they gave a conditional EMD. Until recently, ArcelorMittal was believed to be a strong contender, but it is unclear if it will submit a plan. Last week, the Supreme Court ruled in favour of ArcelorMittal in a dispute with Srei Group regarding the Odisha Slurry Pipeline.