The ICICI Bank, under the provisions of Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Bill, 2002, has served a notice of attachment on the Ahmedabad-based Core Healthcare. The Bank has served the notice in lieu of its long standing NPA and also on behalf of other banks and financial institutions. These institutions have entrusted the Bank to proceed on the debt recovery against their overdue loans with the company.

Core Healthcare, which is one of the major loan defaulters to ICICI, IFCI and IDBI, has been served the notice last week with the endorsement from IFCI, the trustee of NCDs with the defaulter company. According to IFCI sources, the ICICI notice has given sixty days response period to Core Healthcare after which the Bank can proceed on the attachment of the company's assets.

The ICICI sources also confirmed that it has appointed Dalal Consultancy to value the current asset worth of the company and also short listed few prospective buyers for the company's manufacturing facility. The Bank also learnt to have appointed Ernst & Young to prepare a report on the business value of the attachable manufacturing facility of the company to negotiate with the buyers.

Core Healthcare, an erstwhile IV fluid major and also with interest in medical disposables business promoted by the Gujarat-based Handa family, had raised loans amounting to Rs 600 crore from various financial institutions and banks in the country to set up a large manufacturing facility with captive power plant in 1994. Though the plant was commissioned in 1995, the company suffered due to heavy interest burden and other adverse factors. The time and cost overruns incurred in the Rs 891 crore expansion cum diversification project adversely affected the company's profitability while shortage of working capital resulted in low capacity utilisations in all its project lines. At present, the company's total financial liability is around Rs 1,200 crore.

According to IFCI sources, the company's net asset value at present is reportedly be 40 to 50 per cent of the total liability due to the lenders. Hence, even in case of property attachment, the banks may be able to recover only a portion of their NPA. The principal amount of the loans due to IFCI and ICICI by the company are Rs 250 crore and Rs 230 core respectively.

The Securitisation Bill, 2002, passed in the Lok Sabha recently, is to resolve one of the thorniest issues plaguing the Indian financial sector for many years - the Non Performing Assets (NPAs). Under the provisions of the Bill, banks and FIs could take the help of metropolitan magistrate for seizing assets held as collateral in respect of overdue loans of defaulters without going through costly and time-consuming legal process.

Last year, Core Healthcare, has been put in the default grade by the credit rating agency ICRA. According to the agency, this downgrade in rating reflects the inability of the company to repay its debt obligations due to the continuous deterioration in its operating performance. They have downgraded the rating assigned to the non-convertible and partly convertible debenture programme of Core from `LBB' to `LD' indicating default.