Fractured/Earth

By March, seven companies had evinced interest in buying Lanco Infratech.

The company began life in 1986 as a construction contractor, but grew into a power and infrastructure behemoth after liberalisation. Much of this growth was funded by bank loans. In June 2017, after missing its loan repayments, the company found itself on the Reserve Bank of India’s first list of defaulting companies that would have to face insolvency proceedings. At the time, Lanco Infratech owed Rs 45,200 crore to banks and another Rs 5,300 crore to its business partners.

The list of companies that queued up to buy the infrastructure firm was intriguing. There were seven large bidders, four of them from outside India. They operated in disparate fields from international finance and energy to mining and real estate.

Lanco Infratech illustrates a broad pattern that is becoming apparent as India’s National Company Law Tribunal tries to recover bad loans from companies. The tribunal is selling these companies in whole or auctioning off their parts. Alongside, some companies are making their own attempts to reduce debt by selling off some of their units. Through this process, a small group of Indian and foreign companies are taking most of the assets on sale.

Out today, the second part of our series on India’s hugely important insolvency series. This one looks at the folks buying up stranded assets in india.