Edelweiss Asset Reconstruction Company (Edelweiss ARC) plans to deploy Rs 1,200 crore to buy back bad debt mainly from the retail asset pool in the current financial year (FY23).
With the improving business environment, it pegged recoveries between Rs 5,000 crore and Rs 6,000 crore in FY23. Its assets under management (AUM) stood at Rs 40,251 crore end March 2022.
The magnitude of AUM is expected to decrease as a few enterprise NPAs are now in the market. This is because most of them have been resolved. Transactions are also increasingly done in cash instead of security receipts.
RK Bansal, Managing Director and Managing Director of Edelweiss ARC, said the company achieved recoveries worth Rs 6,903 crore with a focus on optimal resolution and recovery of portfolio assets during in FY22. It invested about Rs 1,308 crore to recover stressed loan pools in FY22.
In FY21 when the Indian economy was devastated by the first wave of Covid, ARC recoveries were worth Rs 5,430 crore and it only deployed (invested) Rs 474 crore.
The company continues to maintain its market-leading position with an approximately 45% share in the ARC space. Given the need for granularity and improved cash flow, acquiring and resolving retail assets are priority areas, Bansal said.
The CRA remains active in the area of large notes, that is, business accounts. But volumes are low, given that many large accounts have been resolved or are going to the National Asset Reconstruction Company.
Its board has approved a proposal to raise funds by issuing non-convertible debentures – totaling Rs 6,000 crore – on a private placement basis. It will be in one or more installments.
In FY22, the company recorded total revenue of Rs 899.27 crore (Rs 867.38 crore in FY21). The company’s net profit was Rs 252.67 crore (Rs 185.63 crore in FY21)