NARCL is offering Rs 345 crore for Kurukshetra Expressway debt

MUMBAI: National Asset Reconstruction Co (NARCL) has submitted a bid to assume the debt of Kurukshetra Expressway, a stressed road company with outstanding debt of around Rs 1,500 crore, for around Rs 345 crore, people familiar with the matter told ET.“NARCL has submitted the first bid,” said a source aware of the bidding process. “When there is a challenge, NARCL will be the anchor.” That would mean that NARCL would have the opportunity to exceed its original bid.

Kurukshetra Expressway (KEPL) is currently facing collection proceedings after the toll project on the Rohtak-Bawal section of National Highway-71 in Haryana was terminated. The concession agreement was canceled in July 2021 following prolonged disruptions and suspension of toll collection.

NARCL’s offering is part of ongoing efforts to resolve aging, stressed infrastructure assets transferred by banks under the government-backed bad loan resolution framework. Lenders are currently evaluating the proposal, the people cited above said.

NARCL’s offer has an 85:15 structure where 15% will be paid in cash and the remaining 85% will be paid in the form of security notes backed by a government guarantee. A government guarantee will be invoked to cover the shortfall between the amount realized from the underlying assets and the face value of SRs issued for that asset, with an overall ceiling of Rs 30,600 crore, valid for five years. NARCL aims to resolve stressed loan assets above Rs 500 crore, amounting to approximately Rs 2 lakh crore each.

KEPL, the Road BOOT JV of JMC in Haryana, was set up to develop, operate and maintain the four lanes of the Rohtak-Bawal stretch of NH-71 under Phase III of the National Highways Development Program (NHDP).

This road network in Haryana has terminated its concession agreement with the National Highways Authority of India due to continued force majeure, amounting to farmer agitation, according to Care Ratings, which added that no major cash outflow from KPIL is expected due to the shortfall between the debt owed and the termination payment. In August 2024, KEPL received two arbitration awards in its favor, which were subsequently challenged by NHAI. The project became commercially operational in September 2014. Persistent traffic disruptions, toll issues and disputes eventually led to the termination of the concession, putting the asset under pressure.