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Home / Brand Stories / Restructuring companies before it was popular

Restructuring companies before it was popular

PROMOTIONAL
Nirmal Gangwal, Founder and Chairman of the Brescon Group

The Brescon Group celebrated 25 years of its restructuring and recapitalisation practice with the unveiling of a memoir titled Hope Amidst Adversity – Turnaround Stories, which recounted the courageous journey of 25 corporates that the Group helped to change their destinies

The conviction that Nirmal Gangwal, Founder and Chairman of the Brescon Group, lives by every single day is simple: “Anything is possible." 

The conviction that Nirmal Gangwal, Founder and Chairman of the Brescon Group, lives by every single day is simple: “Anything is possible." 

Gangwal rose from humble beginnings – the eldest of nine siblings, he grew up in a small town in Rajasthan with an education restricted to the vernacular. The family didn’t have the means to educate him further, so he moved to the city of dreams, Mumbai, to pursue a degree in Chartered Accountancy.   

Gangwal rose from humble beginnings – the eldest of nine siblings, he grew up in a small town in Rajasthan with an education restricted to the vernacular. The family didn’t have the means to educate him further, so he moved to the city of dreams, Mumbai, to pursue a degree in Chartered Accountancy.   

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Subsequently, the investment banker mastered the art of harnessing every opportunity – even in the face of adversity – to gain a competitive advantage at a very early age. Instead of letting his educational background pull him back from competing with the best of the best, he completed his Chartered Accountancy. He also obtained a degree in law from Mumbai University and a Company Secretary degree from the Institute of Company Secretaries of India, which placed him in an excellent position to set up his own accountancy practice in 1980. 

A decade later, he wanted to diversify into the investment and project advisory space, and in 1991, Brescon was born as a non-banking finance company. The company grew into a firm of repute, and in 1995, a public issue of shares was launched, which was over-subscribed by about 55 times. But then, the unexpected happened. 

“In 1997, my own account became an NPA, and I went through a lot of insecurity, humiliation and uncertainty. But, I also realised that the difficulty I went through was something that many others faced and still continue to face due to errors in judgement or for external reasons. There was no one to listen to them in the way that they wanted to tell their story. So, my problem became my product after I successfully revived my own business and became a debt-free company," explained Gangwal. 

Along the way, Gangwal retraced his footsteps, investigating what he could have done differently. This adversity helped him to envision what would ultimately shape up to become a truly innovative business idea, and a ‘new’ Brescon was born. Today, the Brescon Group has carved a niche for itself as one of India’s first and largest independent financial advisory firms focused on special situations and stressed assets. 

Over the last 25 years, the company has changed the fortunes of hundreds of other organisations by devising end-to-end solutions for long-term viability. Gangwal has always had an eye for counterintuitive solutions – even in times of extreme adversity – to foster fresh growth and innovation in companies that were, in some cases, being written off even by their own creators. To celebrate this spirit, a memoir titled, Hope Amidst Adversity – Turnaround Stories, was launched recently to mark 25 years of the Brescon Group. The book recounts the courageous journey of 25 corporates that were able to change their destinies during 25 years of the Brescon Group’s rich experience in delivering turnaround stories.

“Brescon and I feel fortunate. Over the past quarter century, we have repeatedly facilitated transformations. We got to witness that there is no such thing as failure. You get multiple chances to convert opportunities into successes. The last 25 years have been about advising corporates on resilience and strategies to bounce back. Our next 10 years are about investing in this transformation," Gangwal said in a chat on the occasion of the launch of the book.

“Our family office will continue to invest in special situations - opportunities capable of a turnaround with potential operating leverage besides seeking capital from like-minded family offices and funds. I term this approach ‘Involve and Invest’. We will bring our strengths to the table and help these corporates with strategies, mentor their teams on implementation and invest in their growth through our family office," he said.

The event started with a keynote address by Shalil Gupta, Business Head, Mint, in which he offered an overview of the corporate restructuring and stressed assets space. The book was unveiled by Premchand Godha, Chairman and MD, IPCA Laboratories; Ayodhya Rami Reddy, Rajya Sabha MP and Founder of the Ramky Group of Companies; Rajesh Jain, MD, Panacea Biotec and Anil Jain, Vice Chairman and MD, Jain Irrigation Systems Ltd. 

In a special panel discussion, these business owners, and past clients of Brescon, shared their experiences of how the Group had helped them to successfully navigate through crisis. 

Brescon has paved the way to success by crafting tailor-made solutions within regulatory parameters, creating a win-win situation for all stakeholders. Take, for instance, the case of Panacea Biotec Limited (PBL), one of India’s leading biotechnology companies that suffered a substantial one-time forex derivative loss - to the tune of Rs 226 crore, during the global crisis of 2008. The losses were driven by adverse exchange rate fluctuations and further accentuated in 2012 when PBL faced another challenge - in the supply of its high-margin products - causing a steep decline of 40% in total revenues. 

Brescon stepped into the picture and transformed the company’s weakness into strength. A distinctive plan was worked out and executed, encompassing a one-time settlement of debt on a bilateral basis to provide an exit for existing lenders and an infusion of fresh funds through the induction of strategic/ special situations investor(s) to finance the debt settlement amount and working capital deficit. As a result, PBL’s market cap grew from its lowest point of Rs 501 crore in FY 2011-12 to over  2,500 crore in FY 2021-22. 

The story of Jayaswal Neco Industries Limited (JNIL), is a similar one. An integrated manufacturer of steel and ferrous castings JNIL was classified by the Reserve Bank of India (RBI) as an NPA in 2016 under its Asset Quality Review (AQR) with retrospective effect for delays in the commencement of projects. In 2017, the lenders’ restructuring exercise was devised around RBI’s guidelines on the flexible structuring of project loans (5/25 scheme), among other reliefs. 

Brescon curated a workable plan that envisaged an exit route to lenders, while providing debt relief to the company. The lenders were presented with an early exit option through a loan sale akin to a one-time settlement (OTS). JNIL demonstrated a sharp recovery, which was reflected in its quarterly EBITDA, growing from  36 crore in December 2019 to a staggering  250 crore in the corresponding quarter of 2020.

Another pertinent case in point is that of the agri-solutions company, Jain Irrigation Systems Limited (JISL) that faced an acute liquidity crisis in 2019, resulting in defaults by the company in servicing its debt. The lenders, reposing trust in Brescon’s experience and capability, appointed it as their advisor to assess the magnitude and complexity of JISL’s liquidity issues and formulate a viable debt resolution plan. 

Brescon estimated cashflows (and the cash-gap) on a realistic basis using time-fractal analyses and convinced lenders to undertake comprehensive restructuring instead of ‘rectification’. To make it a win-win for stakeholders, Brescon suggested equity issuance to lenders to offset part sacrifices through an expected equity upside and structured pledge of a valued subsidiary’s equity to enhance security structure. JISL saw an 11 times increase in market cap in the last two years. Today, the Brescon Group aims to create awareness around liability management as a special category of its domain expertise. 

The welcome note and closing remarks at the event were delivered by Pooja Gangwal Sheth, Partner, Brescon & Allied Partners LLP. Sheth who is also a Leadership Coach, recounted her journey as part of the restructuring and recapitalisation practice and thanked guests for their presence at the event. 

Disclaimer: This article has been produced on behalf of the brand by HT Brand Studio.

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