DEBT-RIDDEN
RCOM TO FILE FOR BANKRUPTCY AS LENDERS FAIL TO REACH CONSENSUS
After almost one-and-a-half years of
unsuccessful attempts to revive the firm, the Anil Ambani-led debt-ridden
Reliance Communications (RCom) Board decided on Friday to take the firm to the
bankruptcy court It decided to move the National Company Law Tribunal (NCLT)
under the Insolvency and Bankruptcy Code, 2016. The Board decided to seek
fast-tracking the debt-resolution plans through the NCLT, Mumbai. The firm’s
Board reviewed the progress of the RCom’s debt resolution plans since the
invocation of strategic debt restructuring (SDR) in 2017. The Board noted that
despite the passage of over 18 months, lenders have received zero proceeds from
the proposed asset monetisation plans, and the overall debt resolution process
was yet to make any headway, RCom said. Accordingly, the Board decided that the
company will seek (to) fast track resolution through the NCLT, Mumbai. The
Board believes this course of action will be in the best interests of all
stakeholders, ensuring comprehensive debt resolution in a final, transparent
and time-bound manner within the prescribed 270 days, the company said. The
Board cited lack of approvals and consensus on important issues as the primary
reason for its decision. Lack of 100 per cent approvals and consensus, as
mandated by the RBI’s February 12, 2018, circular, on all important issues,
among over 40 lenders, Indian and foreign despite the passage of 12 months and
over 45 meetings. Further, the pendency of numerous legal issues at high
courts, the TDSAT (Telecom Disputes Settlement and Appellate Tribunal) and the
Supreme Court impeding progress at various stages has also kept the issue on
hold, RCom said. An official of SBI, which is leading the consortium of RCom’s
lenders, said the bank was not worried about RCom moving the NCLT. RCom is a
non-performing asset for us since many quarters. The bank has made provisions
for this and we are not worried, the official said. Some industry sources have,
however, raised concerns that if RCom were to move the NCLT, it might impact
Jio’s spectrum sharing deal with the company. RCom’s statement noted RCom and
only two of its arms, Reliance Telecom and Reliance Infratel, will take
appropriate steps shortly to implement the Board decision. There will be no
impact on the business and operations of other subsidiaries of the company, it
said. RCom has to pay Rs 550 crore to Ericsson as part of an agreement it had
reached with the latter in the National Company Law Appellate Tribunal (NCLAT).
Apart from Ericsson, the Anil Ambani-led firm has to clear the debt of nearly
39 financial lenders and operational creditors. RCom also has to make a payment
of Rs 230 crore to RCom’s minority shareholders of Reliance Infratel, including
HSBC Daisy Investments.
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WHY DID
NCLT DECLINE ESSAR'S SETTLEMENT PLEA?
The NCLT earlier this week rejected a plea to
settle dues with lenders and withdraw insolvency proceedings against Essar
Steel. The application was filed by majority shareholders of Essar Steel,
against the Resolution Professional and the Committee of Creditors (CoC). Essar
Steel has been under Corporate Insolvency Resolution Process (CIRP) since
August 2017, and has traversed the judicial chain of appeal multiple times
now. Out of the three resolution
applicants for Essar Steel, two of them (ArcelorMittal and Numetal) were initially
found to be ineligible under Section 29A. After the matter reached the Supreme
Court, both parties were granted time to settle their dues to make themselves
eligible resolution applicants. Soon after the Supreme Court passed its verdict
in the Essar Steel case requiring resolution applicant to clear dues, Essar
Steel Asia Holdings Ltd, Essar Steel’s holding company, proposed a settlement
plan by which the entire debt of Essar Steel, Rs. 54, 389 crores would be paid
off. Section 12A of the IBC permits withdrawal of a case under CIRP
post-admission, but it also requires 90% CoC approval, and Regulation 30A of
the CIRP Regulations requires that such a withdrawal can only be done before
issuance of Expression of Interest. In the case of Essar Steel, neither of the
qualifications were satisfied. The CoC declined the settlement proposal and
selected ArcelorMittal’s resolution plan.
However, the applicants took support of Section 12A of the IBC for
making their case, arguing that the IBC through Section 12A does envisage a
situation wherein shareholders are allowed to settle. In the alternative, the
applicants argued that their right of redemption under Section 91 of the
Transfer or Property Act would apply. They further argued that the right to
redemption of property, is a constitutional right and cannot be taken away by a
legislation. On the limited point of right to redemption, the NCLT found that
this constitutional right, contained in Article 300A, is not an absolute one
and can be taken away by the means of a legislation. Accordingly, it found
Section 238 of the IBC, which is a non-obstante clause, to be overriding. As
far as the settlement pleading is concerned, the NCLT noted that the present
application flows from the Supreme Court ruling which required both parties to
clear their dues to become eligible. It then relied on the Supreme Court ruling
and recent NCLAT decision to say that its jurisdiction to entertain this application is limited by
the Supreme Court ruling. The Supreme Court also recorded that, if neither of
the resolution plan is able to muster the requisite majority, Essar Steel will
go into liquidation. This is the limitation within which the NCLT was working-
that the Supreme Court restricted its jurisdiction to determining the resolution
plans. Since a proposal for settlement is a new application which is outside
the scope of the Supreme Court’s ruling, the NCLT found that it does not have
jurisdiction to entertain such an application. It also took a moral dab at the
applicants by recording that, Moreover, the present applicants did not choose
to file such application previously either before this Adjudicating Authority
or before the Honourable NCLAT and the Honourable Supreme Court by making
Intervention Application by showing their bona fide intention for settling the
matter , which could have been dealt with at that point of time by this
Adjudicating Authority or by higher forum. And with this, it rejected the
applicants plea to settle their dues and pull Essar Steel out of the CIRP. But
of course, appeals are expected.
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NCLT
DELHI MERGES ALL PETITIONS AGAINST EMAAR MGF LAND
The National Company Law Tribunal (NCLT)
Delhi on Thursday ordered amalgamation of all cases against Emaar MGF Land and
ordered all the peititoners to file the claim before the resolution
professional (RP) appointed by them. The court was hearing eight cases filed
against the builder and pronounced the same judgement for all. It is needless
to state that the resolution professional shall consider their claim in
accordance with the law. If the order of admission is set aside by any Supreme
Court then an application for revival of the petition would be competent, said
the Judge MM Kumar presiding over the matter.
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DHFL
APPOINTS CA FIRM TO PROBE COBRAPOST CLAIMS
Dewan Housing Finance Corporation Ltd (DHFL)
has appointed an independent chartered accountant firm to verify the
allegations made by Cobrapost and submit a report. Since the beginning of
September 2018, when the IL&FS imbroglio started having a ripple effect on
the financial system, DHFL’s shares have fallen from ₹678.45 to ₹135.85,
nosediving 80 per cent. DHFL informed the exchanges that it has not received
any communication from the MCA in relation to any probe against it.
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PUBLIC
SECTOR BANKS' RECAPITALISATION COMPLETE, NO FISCAL SUPPORT IN FY20
State owned banks are expected to start
2019-20 on a strong financial footing as the Budget document of FY20 showed no
recapitalisation drive for the banks. A number of measures have been
implemented to ensure clean banking. Through a transparent and accountable
process, we (have) recognised NPAs, Piyush Goyal, interim finance minister said.
The finance ministry has infused Rs 1.06 lakh crore as recap bonds during
2018-19, up from budget estimates of Rs 65,000 crore. Providing budgetary
support to public sector banks is part of the government’s broader strategy of
infusing Rs 2.11 lakh crore in the banking sector via various means. The
strategy announced in 2017 included support of Rs 1.35 trillion through
recapitalisation bond, little over Rs 18,000 crore via budgetary support and
rest through market. The finance ministry had decided to support the PSBs who
were found wanting after accelerating non-performing assets. The period of
2008-14 will be remembered as a period of aggressive credit growth and, as per
RBI, the primary reason for spurt in non-performing loans and stressed assets,
Goyal said, attacking the opposition. Goyal said that during 2008 to 2014,
outstanding loans against PSBs increased from Rs 18 trillion to Rs 52 trillion.
The NPAs were close to Rs 10 trillion at the end of March 2018, of these over
Rs 9.62 lakh crore were in PSBs. There were high stressed and non-performing
assets (NPAs) amounting to Rs 5.4 lakh crore in 2014. Many more were hidden
through restructuring or otherwise which were discovered during Asset Quality
Reviews and inspections carried out since 2015, he said. According to data
provided by the government, Rs 51,533 crore were injected in the PSBs till
December 31, 2018 out of budgetary allocation of Rs 65,000 crore. NPAs have
shown negative trend in FY19 and have reduced by Rs 23,860 crore between
April-September 2018, while they recovered Rs 60,726 crore. The recovery is
more than double the amount recovered in the corresponding period last year.
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11
PROMOTER GROUP ENTITIES OF DYNACONS TECH SETTLE DISCLOSURE LAPSE CASE WITH SEBI
Eleven promoter group entities of Dynacons
Technologies including Dynacons Systems & Solutions have settled a case
with Sebi related to alleged disclosure lapses after paying Rs 22.28 lakh
towards settlement charges. In separate orders, the Securities and Exchange
Board of India (Sebi) said the settlement orders dispose of the adjudication
proceedings against the entities. The regulator initiated adjudication
proceedings after it was observed that an individual named Arun Govil in August
2014 made a public announcement to acquire over 2 crore shares through an open
offer, representing 26 per cent shares of the company. Pursuant to the
announcement, Sebi observed that the promoter group had not disclosed the
annual declaration in prescribed format in respect of the shares held by them
in Dynacons Technologies for financial year 2013 and 2014. Under SAST
(Substantial Acquisition of Shares and Takeovers) norms, the promoters along
with persons acting in concert (PAC), need to disclose their aggregate
shareholding as on March 31 of an year within next seven working days to
exchanges and the company.
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GOVT
EXPECTS RS 28,000 CR INTERIM DIVIDEND FROM RBI: DEA SECRETARY S C GARG
Subhash Chandra Garg Friday said the
government expects Rs 28,000 crore from the Reserve Bank of India (RBI) as an
interim dividend in the current financial year. The government has already
received Rs 40,000 crore from the Reserve Bank of India during 2018-19, Garg
told reporters in the post Budget interaction. When asked how much interim
dividend the government expects from the RBI, he said, Rs 28,000 crore. The
decision with regard to interim dividend will be taken in the next board
meeting.
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INDIAN
GAS ENTERS FRAY, BIDS FOR REID & TAYLOR
Indian Gas Ltd. has entered the fray to
acquire Reid & Taylor through the insolvency resolution process. The NCLT’s
Mumbai bench on Thursday entertained the company’s bid for the debt-ridden
textile company after CFM Assets Reconstruction Pvt. Ltd. suddenly expressed
its willingness to withdraw from the race. The court has asked Indian Gas to
pay a non-refundable amount of Rs. 2 crore on February 5. The bench of judges
Bhaskar Pantulu Mohan and V. Nallasenapathy also ordered the new bidder to
appear before the NCLAT on Friday to explain its bonafides and interest in
investing in Reid & Taylor’s resolution process. Recently, Finquest
Financial Solutions, the largest investor in Reid & Taylor, had moved the
NCLAT to challenge the Mumbai NCLT's order that had allowed CFM Asset
Reconstruction to participate in the resolution process though the statutory
270 days period was over. The NCLT has also asked Indian Gas to prove its
networth of over Rs. 50 crore on February 5 when the matter is scheduled for
hearing.
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GOVERNMENT
PROPOSES SINGLE STAMP DUTY RATE FOR FINANCIAL SECURITIES TRANSACTIONS
The government Friday proposed to bring in a
single stamp duty rate for all financial securities transactions, a move that
would help in reducing procedural requirements for brokers. The proposal is
part of the Finance Bill 2019-20 introduced by Finance Minister Piyush Goyal
after presentation of the Interim Budget. Amendments have been proposed to the
Indian Stamp Act.
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PROTECTION
GAP AT 70-80%, INSURERS SHOULD EXPLOIT SITUATION: IRDAI CHIEF
The Protection Gap-difference between insured
losses and economic losses, or uninsured losses, in the country is between
70-80 per cent and insurance companies need to exploit the situation Insurance
Regulatory and Development Authority of India Chairman, Subhash Chandra Khuntia
said. The overall Protection Gap in this country, whether it is life or general
(non-life), in most of the segments the protection gap is about 70 to 80 per
cent. Only 20 to 25 per cent is being availed. There is a huge gap, he said. With
the growth in the economy more and more young people coming into the workforce.
I think the need for insurance will go up manifold in the next few years. This
can be exploited by our insurance companies, Khuntia added. According to a
Lloyd's of London's recent report, India has the second largest insurance gap
in the world of $27 billion (in absolute terms) after China, where the
under-insurance or insurance gap is over $76 billion. The IRDAI chief said
insurance penetration in the country is about 3.7 per cent of the GDP as
against the world average which is 6.31 per cent. The life insurance sector in
India is growing at 11 to 12 per cent. If you look at general insurance it is
growing 18 per cent per annum. Standalone health insurance the average growth
rate is 35 per cent per annum, Khuntia said.
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CLOSE TO
FINALISING RESOLUTION PLAN, SAYS JET AIRWAYS CEO VINAY DUBE
Jet Airways chief executive officer Vinay
Dube has informed employees the airline is very close to finding a solution to
the airline's financial crisis and has sought their support. Our chairman, the
board of directors and your management team are working hard on a balance sheet
transaction that will help us eliminate our current challenges. In fact, the
airline’s key stakeholders are actively engaged towards finalization of the
resolution plan. We are very close and I ask for your continued patience. He
said that the airline will come out of current set of challenges. It might get
tougher before it gets better and our ascendancy will be gradual but
collectively with your unstinted support and commitment we will come out of
this as a stronger airline, he said
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GOVERNMENT
TO ALLOCATE RS 3,900 CRORE TO SERVICE AIR INDIA DEBT
The government will provide a total of Rs
3,900 crore for servicing Air India's loans transferred to a special purpose
vehicle according to Budget documents. The Air India Asset Holding Ltd, a
special purpose vehicle, has been set up as part of financial restructuring of
the debt-laden national carrier. According to the documents presented in the
interim Budget for 2019-20, the government has decided to allocate Rs 1,300
crore for the special purpose vehicle this fiscal. Besides, Rs 2,600 crore
would be provided in the next financial year. Put together, it would be Rs
3,900 crore allocation for the special purpose vehicle.
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WITH JUST
2 MONTHS TO GO, FM GOYAL CONFIDENT OF GETTING RS 44,000 CRORE FROM
DISINVESTMENT
Contrary to the expectation of shortfall in
disinvestment proceeds, Finance Minister Piyush Goyal exuded confidence that
the government will cross the budgeted target of Rs 80,000 crore this year.
Goyal also raised the disinvestment target for the financial year 2019-20 by
12.5% on-year to Rs 90,000 crore. The government has received Rs 35,533 crore
so far, latest figures from Department of Investment and Public Asset
Management show. With just two months left, the government needs to carry out
disinvestment worth Rs 44,467 crore The government has planned another tranche
of ETF in the form of FFO of Bharat 22 ETF and expects to raise around Rs
14,000 crore by selling 52.63% stake in Rural Electrification Corporation (REC)
and another Rs 12,000 crore via buyback of PSUs shares. However, market
volatility ahead of Lok Sabha elections may make it difficult for disinvestment
prospects.
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SBI
REPORTS ₹3,955 CR
PROFIT IN Q3
State Bank of India reported a net profit of ₹3,955 crore in the third quarter ended
December 31, 2018 against a net loss of ₹ 2,416
crore in the year ago quarter. The bottomline was boosted by a 21 per cent
year-on-year (yoy) jump in net interest income at ₹22,691 crore and 39 per cent y-o-y decline in
total provisions at ₹8,670
crore. Non-interest income, however, saw a 0.61 per cent y-o-y dip at ₹8,035 crore. Gross non-performing assets
(GNPAs) during the reporting quarter declined by ₹18,099
crore to stand at ₹1,87,765
crore as at December-end 2018. GNPAs improved from 10.35 per cent of gross
advances as at December-end 2017 to 8.71 per cent as at December-end 2018. Net
NPAs improved from 5.61 per cent of gross advances as at December-end 2017 to
3.85 per cent as at December-end 2018. Whole bank advances registered a growth
of 12 per cent y-o-y to ₹21,55,316
crore as on December-end 2018. Within this, corporate advances grew by 21 per
cent y-o-y; retail personal loans were up 18 per cent; and small and medium
enterprise loans increased by 9.50 per cent. Deposits at the whole bank level
grew by 7 per cent y-o-y to ₹28,30,538
crore as on December 31, 2018.
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JET
AIRWAYS LOAN RECAST TO BE UNDER SASHAKT SCHEME: SBI CHIEF RAJNISH KUMAR
Lenders to ailing private airline Jet Airways
will restructure loans under the ‘Sashakt’ plan for resolution of stressed
assets outside the insolvency courts. Rajnish Kumar in a media call after Q3
results said there is effort going on to resolve (jet). It (Jet debt recast
proposal) will go to screening panel at Indian Bank’s Association (IBA). The
detailed will be revealed when it is finalized. The ‘Sashakt’ plan for
resolution became operational in December 2018 after months of delay. Lenders
are supposed to send resolution proposals under the scheme according to the
terms and conditions of the inter-creditor agreement signed in 2018. Lenders to
submit credit rating agencies’ reports forensic reports, minutes of meetings, and
summaries of resolution plans, among others. The panel will only look if
process has been followed and will not decide on terms for restructuring
package, senior banker said. The IBA has
already identified six professionals to head an overseeing committee to
validate the resolution process for accounts under Sashakt scheme. H R Khan,
former deputy governor of Reserve Bank of India; M Damodaran, former chairman
of Securities and Exchange Board of India; Janki Ballabh, former chairman of
State Bank of India; and M B N Rao, former chairman and managing director of
Canara Bank, are some of members of the panel. There have been reports that SBI
may have 15 per cent stake in airline capital after part of loans are converted
into equity. Rajnish Kumar declined to elaborate on how much stake bank will
have in airline post-conversion.
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RERA
REGISTRATION EXTENDED
Telangana State Real Estate Regulatory
Authority (TS-RERA) on Thursday announced that all applications received after
January 31 for the registration of projects will be considered only if they pay
Rs. 2 lakh as penalty since their applications are liable for rejection for
missing the month-end deadline. Rajeshwar Tiwari after holding a meeting with
the TS-RERA authorities said it was decided to extend the date once again as it
may not be appropriate to outrightly reject the applications and it was decided
to give them one more opportunity. Applications registered before February 15
will have to pay the penalty fee and the process of registration of ongoing
projects will be open for those cases where the permissions were taken between
01-01-2017 and 31-08-2018 from the competent authorities.
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WHATSAPP-INSTAGRAM-MESSENGER
INTEGRATION NOT BEFORE 2020, SAYS FACEBOOK CEO MARK ZUCKERBERG
While reports last week indicated Facebook’s
plan to merge its messaging systems such as Messenger, WhatsApp and Instagram
into a single platform, the company’s CEO Mark Zuckerberg has now confirmed
that it will indeed combine these messaging platforms into one. The CEO made
the announcement during Facebook’s Q4 2018 earnings call. While previous
reports and threads explained that merging would make it easier to send
messages across these apps, Zuckerberg has now explained that combining these
three platforms will provide offer more secure end-to-end encryption While
end-to-end encryption is currently available only on WhatsApp, this move is
said to benefit Messenger and Instagram users as it would enable them to send
end-to-end encrypted messages across these platforms. Right now end-to-end
encryption has to be activated on Messenger whereas it’s not available on
Instagram DMs. Zuckerberg further pointed out that the combined messaging
platform will bridge ‘certain’ gaps in communication. He also noted that ‘tens
of millions’ of Android users who use Messenger as their default SMS app at
present would benefit from having encryption enabled as a default. But while
the company shared insights on its plan of merging the apps into and explained
why it wants to combine the apps ‘underlying infrastructure,’ it won’t happen
until 2020. As for the layout, Zuckerberg highlighted that the merger of these
three platforms would create an iMessage-like layer for SMS. The iMessage like
layer for SMS is believed to provide users more functionality and security. But
while Facebook’s CEO is planning to broaden the availability of end-to-end
encryption by stitching the apps’ infrastructure into one, several questions
have raised about privacy and how users data will be shared across these
messaging services.
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DATA
PRIVACY ROW CONTINUES TO HAUNT FACEBOOK, LIKELY TO FACE MORE US PROBES
Facebook Inc could be subjected to at least
two more state probes in the United States on the alleged mishandling of user
data, Bloomberg reported on Thursday. The report, which cited people familiar
with the matter, said Pennsylvania Attorney General Josh Shapiro and his
Illinois counterpart Kwame Raoul have joined forces with Connecticut to focus
on investigating existing allegations. The state probes are coalescing into two
main groups, the report said. New York, New Jersey and Massachusetts are also
probing the social media giant and are seeking to uncover any potential unknown
violations.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
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