Asset Reconstruction Company (Arcil) aims to increase its assets under management (AUM) to Rs 20,000–22,000 crore in the next two to three years, up from Rs 16,800 crore at present, chief executive officer and managing director Pallav Mohapatra told FE. The country’s oldest asset reconstruction company plans to raise the share of retail assets to 40%, up from the current 30%.
“Going forward in two or three years, we will increase AUM to Rs 20,000 to Rs 22,000 crore. The recovery at the same time will always remain around 60% to 75%,” said Mohapatra.
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The company’s AUM stood at Rs 15,000 crore at the end of March this year. Established in 2002, Arcil is the country’s first ARC to commence the business of the resolution of stressed assets upon acquisitions from banks and financial institutions.
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With growing competition for stressed corporate assets, several ARCs have turned their focus on acquiring retail assets. Aiming to diversify its asset base, the company has started looking at acquiring retail-stressed assets.
“Share of retail assets has increased over the past few years. Earlier the share of corporate stressed assets was 90% and the share of retail was 10%. Now the share of retail has increased to 30%,” said Mohapatra. “In two to three years, it will go up to 40%,” he added.
The improving health of the corporate loan books of banks and the cyclically low gross non-performing assets (GNPAs) in the banking sector have impacted the supply of stressed corporate assets in recent quarters. The company has also started seeing signs of stress emerging in the unsecured portfolios of NBFCs.
“For corporate stressed assets, recoveries tend to be irregular and happen in large chunks rather than consistently. In contrast, recoveries from retail stressed assets are generally more steady and sustainable over time,” said Mohapatra.
The company is planning to use data analytics to for analysing retail stressed assets.
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