OUR SERVICES
As one of India’s leading ARCs, within a short period of 6 years since our inception, we have carved a niche for ourself in the financial restructuring space. We work relentlessly and diligently in identifying the needs of our clients and investors ensuring a win-win collaboration for all.
We strive to turnaround stressed SMEs and mid-corporates to enhance their underlying value. Our success with turnaround of viable units has led to job creation and protection for the worker community, thereby leading to social and economic upliftment.
Our service offerings have two primary verticals and are at all times in compliance with regulatory issues and guidelines as may be applicable to each such business vertical.
AQUISITION
At CFM ARC, we follow a robust strategy for acquisition of NPLs and purchase NPLs at a realistic acquisition price from the lenders. We have an extensive network of consultants and advisors pan India with extensive experience in banking and various industries, who identify NPL cases with a potential to be revived and restructured. Our team then follows a rigorous due diligence process to assess the legal and operational status of the account. A comprehensive acquisition note is prepared which is put forth to the CARFA comprising of senior bankers with rich experience in stressed asset resolution who approve each proposal before acquisition. Some of the factors considered during due diligence and by the committee before acquisition are as follows -
1. High potential of recovery/resolution in the NPA account in sight before acquisition – NPAs where turnaround and business viability is possible
2. Adequate underlying tangible security should be available in the form of primary or collateral security. In case of exceptions, assets should be adequately guaranteed by persons having significant net worth.
3. Average resolution period of three to five years
4. Preference to MSME and mid-corporate borrowers with debt in the range of INR 1 cr – INR 1000 cr
5. Preference to sole banking NPAs
6. NPAs whereby last mile funding can revive the unit to generate adequate cash flows, thereby making the business viable and ensuring growth.
RESOLUTION
CFM ARC’s resolution activities revolve around the core idea of maximization of realization from each distressed account it acquires. The main aim of our ARC is to revive and turnaround the distressed company where ever possible, by providing a new lease of life to the borrower/promoter and supporting the livelihood of hundreds and thousands of workers and employees working in these companies.
Under the extant Reserve Bank of India (RBI) guidelines, ARCs are empowered to adopt one of the following resolution strategies or a combination thereof, for reconstruction of the acquired assets:
1. Change in or takeover of management of the business of the borrower
2. Rescheduling of payment of debts payable by the borrower
3. Settlement of dues payable by the borrower
4. Enforcement of security interest
5. Sale or lease of part or whole of the business of the borrower
6. Convert any portion of debt into shares of a borrower company
Our ARC’s resolution strategy has primarily been on arranging for additional financing – (last mile financing, critical capex / working capital financing) for the company through our deep connects with banking and financial institutions and the investing banking community, which is crucial for the company’s revival.
Our secondary strategy is to get into a negotiated settlement with the borrower once account is taken over from the lenders, thereby providing him an extended time period of repayment aligned with the operational cash flows. The convenient repayment scheme leads to value maximization of the company as the borrower is able to plough back majority of the cash flows in increasing the operational capacities.
Enforcement of security interest or sale of the business is our last priority and is adopted only in cases where revival of the distressed company is not feasible or where the borrower is uncooperative.
DILIGENCE & EVALUATION OF THE FINANCIAL ASSET
Due Diligence of the FA proposed to be acquired includes financial and legal diligence as also any other diligences, on a case-to-case basis. As per RBI regulations, the ARC gets at least two weeks to carry out due diligence before bidding for the stressed asset.
