IFCI has filed two insolvency petitions, the first against Reliance Naval and Engineering and the other against its subsidiary Reliance Marine and Offshore with the Ahmedabad bench of the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). On November 27, the two-member bench asked both firms to file their objections, if any, within a week. Both cases have been listed for further hearing on December 8. Sources close to the company told FE that IFCI aims to recover Rs 150 crore from the subsidiary Reliance Marine through the insolvency application. Reliance Marine and Offshore is engaged in building and repairing ships and boats. Reliance Naval and Engineering reported a net loss of Rs 523 crore in 2016-17, marginally smaller than the Rs 528 crore in 2015-16. The firm’s website claims it is the first company in the private sector to have obtained a licence and contract to build warships and has six subsidiaries, including one in Singapore.
Reliance Naval’s debt stood at Rs 8,951 crore in FY17, according to Bloomberg data. As on September 30, promoters held a 30.70% stake in the company. Reliance Naval and Engineering said in a statement on Thursday that there are no merits in the application filed by IFCI before NCLT, Ahmedabad, as it is an unsecured creditor. “The action of IFCI is unwarranted and premature. The 25 secured lenders of the company have also requested IFCI that the matter be resolved outside the NCLT,” it said.
In the latest annual report, Reliance Naval said its operations were “severely impacted” due to long gestation period of large-scale infrastructure created by the company and non-availability of timely working capital. Once a petition is admitted in the NCLT, the interim resolution professional is needed to find, along with the committee of creditors, a resolution plan within 180 days, which can be extended up to 270 days. If the committee fails to find one, then the company will be liquidated.