INTRODUCTION

Bharatiya Fincom Pvt Ltd Pvt lt applies a scientific approach for acquisition of assets. The company offer flexible acquisition structures to the selling banks and financial institutions, for their distressed assets across sectors and geographies. Our acquisition processes are governed by our Financial Asset Acquisition Policy framed under the extant guidelines for asset reconstruction companies. Our investment strategy focuses on acquiring good quality assets at the right price and limiting the downside risk by ensuring sufficient underlying security value.

FRAMEWORK

Bharatiya Fincom Pvt Ltd operates in a competitive environment, where the struggle for survival on the market is rather challenging; the management faces new challenges and therefore needs to identify methods, and even techniques, which allow it to select from the market those assets that provide an optimal ratio between the acquisition cost and the economic performance.

The framework for the acquisition of financial assets shall conform with the provisions and the Rules made thereunder, the RBI Guidelines, and the Financial Asset Acquisition Policy adopted by BHARATIYA FINCOM PVT LTD PVT LTD, as may be amended from time to time.

• Management Reserves the right of decision on the portfolio to be purchased.
• The Bidding or the final quote has to be approved by the Management Team
• Portfolios where the Cost vs. Projected Return is more than 25 % IRR to be bid for.
• Unsecured pool to be given priority over Secured Portfolio
• Portfolio to be bid for only on funds/investors’ availability.

Department Responsible

The management team will request the Acquisition Team to look for business opportunities and scout for and identity NPAs acquired from banks, FIs, ARCs, NBFCs, and other entities permitted to sell NPAs to ARCs.

Sourcing opportunities:

1. Approach any eligible Seller / Originator for a specific individual Financial Assets or a portfolio
2. Participate in the bidding process / open auctions by any Seller / Originator
3. Participate in bidding process / specific invitation to sell Financial Assets by Sellers / Originators
4. By accepting the offer made by a Seller / Originator to acquire a specific individual Financial Assets or a portfolio
5. By participating in any other mode adopted by a Seller / Originator

NDA to be executed with Seller / Originator

If the Seller / Originator has prescribed the NDA format, the Acquisition Dept shall forward the draft NDA in MS Word format to CLD for vetting.

Once the draft NDA is vetted and approved by the CLD, with or without changes, the same shall be executed b the authorized person and submitted to the Seller / Originator.

Pre-Acquisition Stage

An initial assessment of the transaction is required to be done by the (Acquisition Dept) AD, keeping in view, inter-alia the following aspects:

1. Size of the assets/portfolio (number of assets and value)
2. Nature and realizable value of security available
3. Status of pending litigation
4. Statutory and contingent liabilities
5. Promoters/management of the borrower

The AD shall analyse the data in the PIM and prepare a note to be submitted to the Sanctioning Authority. If the Sanctioning Authority is convinced of the opportunity, it shall accord approval to initiate the process for acquisition, including commencing valuation and legal, due diligence of the financial assets.

Valuation and Due Diligence

Due diligence comprises legal and financial due diligence, ascertaining valuation of underlying security interest, i.e., the assets available as security or the estimation of cash flows from operations of the borrower’s business proposed to be acquired.

Credit will conduct financial/credit due diligence by Credit, who would analyse the financial documents, sanctions of credit facilities and disbursements, statement of accounts, etc.

If due diligence is not conducted in-house, an empanelled firm / PCA firm with relevant experience shall be engaged with the requisite scope of work for due diligence.

The AD would submit to the Sanctioning Authority a note with the outcome of their due diligence, their recommendations, the terms of valuation, and the terms of acquisition as discussed and agreed with the potential Seller / Originator.

Data received from Bank to be verified for adequacy.

The AD shall insist on the Seller / Originator to provide the critical information such as CERSAI IDs, ROC charge IDS, information on pending litigation, name of advocate involved, actions for enforcement under the SARFAESI Act or through DRT initiated, etc. in respect of each borrower as part of the PIM and/or the due diligence conducted by BHARATIYA FINCOM PVT LTD PVT LTD.