Lanco Amarkantak Recovery To Reflect In Banks' Subsequent Earnings, Says Citi
The stress would have been fully provided for and recovery proceedings will flow through the profit and loss statement cushioning credit cost, said Citi
The impact of Lanco Amarkantak Power Ltd. resolution will likely be reported in the earnings of lending banks by second or third quarter of this fiscal, Citi Research said in a note. The insolvency resolution saw recovery run rate of 28.7% against the claims submitted worth Rs 14,631.7 crore.
On Friday, Adani Power Ltd. received approval from the National Company Law Tribunal to acquire insolvent Lanco Amarkantak Power Ltd. for an up front payment of Rs 4,101.1 crore. The deal has to be completed Oct. 20. this year, as per the tribunal's order.
As the resolution process began in 2019, the stress would have been fully provided for and recovery proceedings will flow through the profit and loss statement cushioning credit cost, said a Citi note released after the NCLT order.
Of the 16 lenders who submitted claims, 12 voted in favour of the resolution proposal, while two dissented. Edelweiss Asset Reconstruction Co. abstained from voting.
As per the approved resolution plan, Power Finance Corp and Rural Electrification Corp will receive the most Rs 913.2 crore and Rs 839.6 crore, respectively. Axis Bank will recover Rs 348.5 crore, while state-run lenders, including IDBI Bank, Indian Overseas Bank, Union Bank, Punjab National Bank and Bank of India, around Rs 1,580 crore.
Kotak Mahindra Bank and ICICI Bank did not present any admissible claims.
Lanco Amarkantak runs a 600-MW thermal power plant in Chhattisgarh's Korba district, supplying electricity to Haryana and Madhya Pradesh under long-term power purchase agreements.
The company also holds a 2.784 MMT fuel supply agreement with South Eastern Coalfields Ltd., a subsidiary of Coal India Ltd., and is working on expanding its capacity by an additional 1,320 MW under phase-II development.
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