Lead Story

You Owe Us - Part 2

Asset Reconstruction Companies are banking on the newly introduced bankruptcy law to monetise the non-performing assets that they are taking over

Given their capital constraints, smaller ARCs are content taking bets on micro, small and medium enterprises (MSMEs). The time taken for recovery is also lesser compared to that in bigger ticket loans. For Reliance ARC, while the focus is more towards retail (60% of AUM) and SME (15%), its MSME exposure includes an auto component manufacturer, a steel player, a railway contractor and a liquor distributor. “A Kolhapur-based auto ancillary’s export orders were cancelled after 2008. His factory was shut, so we did some restructuring and re-oriented his business towards the domestic market. Then, there was a railway contractor who was stuck in some projects, so we helped him complete the projects,” says Asokan Arumugam, CEO, Reliance ARC, which is majority-owned by Reliance Capital.