Aditya Birla ARC Achieves 40% IRR, Plans to Surrender ARC License
Aditya Birla ARC, a joint venture between Varde Group and Aditya Birla Capital, is winding down operations and surrendering its ARC license after achieving a 40% IRR on ₹6,000 crore invested in stressed assets. The company reported absolute profits exceeding ₹10,500 crore. Notable successes include the KSK Mahanadi Power deal, where lenders recovered over 100% of dues, and the RattanIndia Power restructuring, which yielded a 34% IRR. The decision to wind down comes as bad loan ratios in the Indian banking sector have declined to a 15-year low of 2.30-2.40%. CEO Sanjay Jain has transitioned to an advisory role.

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Aditya Birla ARC, a joint venture between Varde Group and Aditya Birla Capital, has reported impressive returns on its investments in stressed assets. The company has decided to wind down its operations and surrender its Asset Reconstruction Company (ARC) license after successfully recovering all dues.
Strong Performance in Stressed Asset Investments
The ARC has delivered a remarkable 40.00% internal rate of return (IRR) to investors on ₹6,000.00 crore invested in stressed assets. This performance has resulted in absolute profits exceeding ₹10,500.00 crore, showcasing the company's expertise in managing and recovering distressed assets.
Notable Success Stories
Aditya Birla ARC's success can be attributed to its strategic investments and effective management of distressed companies. Two significant examples stand out:
KSK Mahanadi Power Deal
In the KSK Mahanadi Power case, the ARC acquired 34.00% of the company's debt at 29 paise per rupee. The investment paid off handsomely, with lenders recovering over 100.00% of their dues through:
- JSW Energy's acquisition of the company for ₹15,985.00 crore
- ₹11,000.00 crore generated from operational cash flows
RattanIndia Power Restructuring
Another notable success was the RattanIndia Power deal, where Aditya Birla ARC:
- Acquired ₹6,500.00 crore of debt from 12 lenders
- Successfully restructured the debt
- Achieved a 34.00% IRR on the investment
Decision to Wind Down Operations
Despite its success, Aditya Birla ARC has made the strategic decision to cease new investments and surrender its ARC license. This move comes in the wake of improving asset quality in the Indian banking sector, with bad loan ratios declining to a 15-year low of 2.30-2.40%.
Leadership Transition
As part of the wind-down process, CEO Sanjay Jain has transitioned to an advisory role within the organization.
Industry Implications
The decision by Aditya Birla ARC to exit the stressed asset market may signal a broader trend in the industry. With the improvement in asset quality across the banking sector, many ARCs are reportedly considering winding down their operations.
This development highlights the cyclical nature of the stressed asset market and underscores the importance of timing and expertise in achieving successful outcomes in this challenging sector.