OUR SERVICES

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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. 

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RESOLUTION
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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.

 

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1. Legal Due Diligence (LDD)
- Review of loan documents for creation of security and collateral cover, including enforcement pertaining to primary and collateral securities, enforceability of documents pertaining to guarantors in respect of their liabilities, clarity of title, attachment orders, if any in force. The scrutiny also covers details of actions pending/ contemplated, if any by tax authority.
2. Borrower Diligence
- Collection of market information about the borrowers/guarantors and the financial asset proposed to be acquired.
- Site visits and inspection of borrower's premises/place of business are carried out either internally or by appointing an external agency.
3. Financial Diligence
- The ARC undertakes valuation of proposed acquisition based on size of the asset, acquisition category and proposed resolution mechanism.
- Valuation of the FA is carried out internally or through appointment of external agencies. In case of real estate, the applicable rates as per ready reckoner are used as an alternative.
4. Collateral Diligence
- When the resolution is expected to be based on sale of underlying securities, site visits are conducted to understand the value, marketability and any other relevant issues regarding the property.
- Fresh valuation report of the underlying secured assets is obtained if the valuation carried out by the seller bank / FIs is more than 1 year old.

 

In case-of acquisition-via- IBC-process-in which-the ARG acts as a-Resolution Applicant; the-diligence of the Domestic/International investor is also undertaken

Get In Touch

Phone

+91- 22 49703233 ( Board Line)

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