RS 2,000 CR OF UNCLAIMED DIVIDENDS LYING WITH INVESTOR
PROTECTION AUTHORITY
The investor education and
protection fund authority (IEPFA) has unclaimed dividend of Rs 2,000 crore
Senior government officials say there are at least 2.5 million investors who
have not claimed their dividends Most of the cases are related to those who
have shares in physical papers and not in dematerialised forms. A senior
government official told, There are claims going up to lakhs of rupees. As many
as 99 per cent of such shares are in the physical form Since shares are in the
physical form, they just forget to claim it. The official also said that in many
cases shares have not been transferred from a deceased person’s name to the
legal heir. The Securities and Exchange Board of India (SEBI) has mandated that
all physical shares should be dematerialised by 31 March. Experts say there is
hardly any awareness among investors on claiming their dividend from the
companies they have invested in. Investors not claiming their dividend are in
the thousands in some of the Sensex companies. For instance, 3,329 investors
have not claimed their dividends totalling over Rs 11 lakh from Bharti Airtel
for 2016-17. In the case of Hero Motocorp more than Rs 8 crore of dividends
have not been claimed for 2016-17. In the case of ITC Limited, dividends to the
tune of more than Rs 32 crore have not been claimed for the same year. In case
of ONGC, 2,054 investors did not claim their dividend. 1,517 Bajaj Auto
investors didn't claim dividends of Rs 4 crore.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
INSOLVENCY AND BANKRUPTCY (APPLICATION TO ADJUDICATING
AUTHORITY) AMENDMENT RULES, 2019
In exercise of the powers
conferred by clauses (c), (d), (e) and (f) of sub-section (1) of section 239
read with sections 7, 8, 9 and 10 of the Insolvency and Bankruptcy Code, 2016
(31 of 2016), the Central Government hereby makes the following rules to amend
the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules
2016, namely:-
1. (1) These rules may be
called the Insolvency and Bankruptcy (Application to Adjudicating Authority)
Amendment Rules, 2019
(2) These rules shall come
into force from the date of their publication in the Official Gazette.
2. In the Insolvency and
Bankruptcy (Application to Adjudicating Authority) Rules, 2016,-
(a) in Form 1
(i) for the heading, the
following heading shall be substituted namely:-
_11. APPLICATION BY
FINANCIAL CREDITOR(S) TO INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER
CHAPTER II OF PART II/ UNDER CHAPTER IV OF PART II OF THE CODE_
[strike out whichever is
not applicable];
(ii) in Part-II, after
serial number 5, the following shall be inserted namely:-
6. DETAILS OF THE CORPORATE DEBTOR AS PER THE NOTIFICATION
UNDER SECTION 55 (2) OF THE CODE –
(i) ASSETS AND INCOME
(ii) CLASS OF CREDITORS OR
AMOUNT OF DEBT
(iii) CATEGORY OF
CORPORATE PERSON (WHERE APPLICATION IS UNDER CHAPTER IV OF PART II OF THE CODE)
;
(b) in Form 5
(i) for the heading, the
following heading shall be substituted namely:-
_11APPLICATION BY
OPERATIONAL CREDITOR (S) TO INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS
UNDER CHAPTER II OF PART II/ UNDER CHAPTER IV OF PART II OF THE CODE_
[strike out whichever is
not applicable];
(ii) in Part-II, after
serial number 7, the following shall be inserted namely:-
_8. DETAILS OF THE
CORPORATE DEBTOR AS PER THE NOTIFICATION UNDER SECTION 55 (2) OF THE CODE_
(i) ASSETS AND INCOME
(ii) CLASS OF CREDITORS OR
AMOUNT OF DEBT
(iii) CATEGORY OF
CORPORATE PERSON (WHERE APPLICATION IS UNDER CHAPTER IV OF PART II OF THE
CODE);
(c) in Form 6
(i) for the heading, the
following heading shall be substituted namely:-
_APPLICATION BY CORPORATE
APPLICANT TO INITIATE CORPORATE INSOLVENCY RESOLUTION PROCESS UNDER CHAPTER II
OF PART II/ UNDER CHAPTER IV OF PART II OF THE CODE_
[strike out whichever is
not applicable];
(ii) in Part-I, after
serial number 8, the following shall be inserted, namely:-
_9. DETAILS OF THE
CORPORATE DEBTOR AS PER THE NOTIFICATION UNDER SECTION 55 (2) OF THE CODE_
(i) ASSETS AND INCOME
(ii) CLASS OF CREDITORS OR
AMOUNT OF DEBT
(iii) CATEGORY OF
CORPORATE PERSON (WHERE APPLICATION IS UNDER CHAPTER IV OF PART II OF THE CODE).
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
‘BORROWERS CAUTIOUS AFTER IBC KICKED IN’
With the advent of
Insolvency and Bankruptcy code (IBC), borrowers are cautious about taking more
money from banks, V.G. Kannan, said. Big borrowers now know that they would be
in trouble if they borrow and don’t repay The strict measures by RBI on lending
are making banks and borrowers cautious. It is good to have good growth in
small amounts than bad growth in large amounts, he said. Mr. Kannan also
pointed out that earlier the recovery ratios in India were in single digit,
when compared to other countries. We had mechanisms like Debt Recovery Tribunal
and Board for Industrial and Financial Reconstruction (BIFR). But due to the
long legal process, recovery and resolution was not happening. But the IBC,
despite some delays, has made 60-70% recovery possible now, he said. In the
last one-and-a-half years, IBC has set a lot of precedence. This is going to
help in faster resolution within the 180 days’ time-frame in the future, he
said. Padmaja Chunduru, said the concept of creditor-in-control was well
established now with IBC. Many customers are telling us we will make the
payment and please don’t go to National Company Law Tribunal (NCLT). That is a
nice position to be in. Borrowers assure us they would make the payment in
order to avoid facing NCLT proceedings. Promoters become apprehensive of losing
control and come to the negotiating table, and bankers feel empowered about it,
she said. Ms. Chunduru also pointed out that the rules pertaining relating to
insolvency of individuals and partnerships needed to be notified soon.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SBI TO AUCTION NPA ASSETS WORTH ₹6,169 CRORE IN MARCH
The State Bank of India
(SBI) will auction non-performing assets (NPAs) amounting to ₹6,169
crore in the next 10 days to recover its dues from various defaulting business
outfits. The country's largest lender carries out auctions of financial assets
of those defaulters who have not paid their dues. From March 22-30, the bank,
which has already put out a list of the assets, will auction these to asset
reconstruction companies (ARCs), banks, non-banking financial companies (NBFCs)
and FIs. The accumulated value of assets on sale is ₹6,169
crore and the actual realisation will happen depending on the reserve price and
bids from the buyers.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
NCLAT ACCEPTS RBI REQUEST TO BE IMPLEADED AS ‘PARTY
RESPONDENT’ IN IL&FS CASE
The National Company Law
Appellate Tribunal (NCLAT) has accepted the RBI’s impleadment request as a
party respondent in the appeal filed by the Centre against NCLT’s historic
February 25 order in the IL&FS case. As the regulatory authority overseeing
banks and non-banking finance companies, the central bank had submitted to the NCLAT
that it was interested in the outcome of the appeal filed by the Centre in the
IL&FS case. RBI’s request for impleadment as a party respondent was
accepted at the NCLAT hearing on Tuesday, and the next date of hearing is now
proposed for March 29, said sources close to the development. It may be
recalled that NCLT, by its orders dated October 15, 2018, February 11, 2019,
and February 25, 2019, had passed various directions, including direction to
all banks and financial institutions not to declare the accounts of
Infrastructure Leasing & Financial Services Limited (IL&FS) or its
entities as non-performing assets. In its application for impleadment, the RBI
has submitted that if the banks and financial institutions implement the orders
of NCLT, it would lead to a situation where the statutory
instructions/guidelines/circulars issued by the RBI would become infructuous.
Reliance Communications moves NCLAT to stop permit cancellation
Reliance Communications
has moved the National Company Law Appellate Tribunal, asking it to direct the
telecom department not to cancel its mobile permits for missing a spectrum
payment. The Anil Ambani-led telco is said to have also sought the appellate
tribunal’s intervention to ensure that the government does not invoke RCom’s
bank guarantees, citing an NCLAT order dated February 4 to that effect.
However, the department is learnt to have said that the NCLAT order does not
apply in this case since RCom is no longer in the picture as the matter is
between the government and SBI, which is the guarantor of the RCom’s spectrum
dues, a person with direct knowledge of the matter said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
BHUSHAN POWER OPERATIONAL CREDITORS OPPOSE COC-APPROVED PLAN
Operational creditors
(OCs) to Bhushan Power and Steel (BPSL) on Tuesday raised objections over the
committee of creditors (CoC)-approved plan before the National Company Law
Tribunal (NCLT), terming it as discriminatory. The CoC had in August last year
approved JSW Steel’s 19,700-crore plan for BPSL. Counsel appearing on behalf of
the OCs before the principal bench of the adjudicating authority also alleged
that they were never given a copy of the resolution plan The counsel also
raised objection to the distinction made among the OCs. The NCLT bench, headed by
its president Justice MM Kumar, has scheduled the matter for further hearing on
March 25. The NCLT has been hearing the matter for approval of JSW Steel’s plan
on a daily basis. It has been directed by the National Company Law Appellate
Tribunal (NCLAT) to decide on JSW Steel’s bid for the company by March 31. In
the next scheduled hearing, the NCLT is expected to complete hearing the OCs
and may also start hearing objections raised by BPSL’s erstwhile promoters.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
DON'T MAKE IT A PRESTIGE ISSUE, NCLAT TELLS RBI OVER IL&FS
NPA RULE
The National Company Law
Appellate Tribunal (NCLAT) on Tuesday admitted the Reserve Bank of India’s
(RBI’s) plea seeking modification of the February 25 order of the appellate
tribunal in which it had said that the group companies of Infrastructure
Leasing & Financial Services (IL&FS) would not be classified as
non-performing asset (NPA) by banks without prior approval. Asking the RBI not
to make it a prestige issue, the NCLAT observed that the central bank should
cannot restrict the appellate tribunal from passing orders in the issue. RBI
had approached NCLAT seeking to implead itself as a party in the ongoing
IL&FS case and said that the orders passed by NCLAT on February 25 would
lead to a situation where statutory instructions/guidelines/circulars issued by
the Reserve Bank of India become infructuous. The NCLAT had barred banks and
financial institutions from declaring accounts of debt-ridden IL&FS and its
group companies as NPAs without its permission. The tribunal's directions had
come during a hearing on government's plan for the resolution of IL&FS
group companies. Sixty-nine firms of the group have been classified under these
categories based on their ability to service routine debt obligations. Those
companies which had no cash were classified as red Those with enough to pay
secured creditors but not unsecured ones are amber. And, those in no position
to pay any creditor are red. The NCLAT had then allowed green firms to service
debt obligations. On Tuesday, the new board of IL&FS said that the number
of companies that could be placed in the green category could now be increased
to 50 as it had identified 29 new companies which had enough capital to
continue servicing their debts. The NCLAT on Tuesday also asked the government
to submit an affidavit detailing the roadmap for resolution of companies
classified under the amber and red categories. On Tuesday, the board also
informed the NCLAT that a Committee of Creditors like mechanism would be formed
where the lenders of the respective group companies would be invited to join
and where resolution applicants would also be invited. The new board of
IL&FS also informed the NCLAT that it had invited applications for
appointment of a Resolution Professional who would work alongside Justice D K
Jain for the resolution of the debt of the group companies. The NCLAT had in
February appointed retired Supreme Court judge Justice Jain as the supervisor
for the resolution process.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RBI SEEKS MODIFICATION OF NCLAT ORDER IN IL&FS CASE
The Reserve Bank of India
has moved the National Company Law Appellate Tribunal (NCLAT) over the latter's
order regarding classification of debt of IL&FS group companies as
non-performing assets (NPAs). A two-member NCLAT bench, headed by Justice S.J.
Mukhopadhaya, had said it would hear the Reserve Bank of India (RBI) on the
issue. The RBI seeking modification of the order passed by the tribunal, which
had provided a moratorium on repayment of loans regarding the accounts of
IL&FS and its over 300 group companies. During the proceedings, RBI's
counsel said there was a overlap of power on the issue The tribunal had also
asked the Ministry of Corporate Affairs about the progress made with respect to
resolution of IL&FS issues. Further, the tribunal also sought company-wise
updates from the Committee of Creditors (CoC) and Resolution Professional (RP).
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
IBBI, SEBI SIGN MOU FOR BETTER IMPLEMENTATION OF IBC
The Insolvency and
Bankruptcy Board of India (IBBI) signed a Memorandum of Understanding (MoU)
today with the Securities and Exchange Board of India (SEBI). The IBBI and the
SEBI seek effective implementation of the Insolvency and Bankruptcy Code, 2016
(Code) and its allied rules and regulations, which have redefined the
debt-equity relationship and aims to promote entrepreneurship and debt market.
They have agreed under the MoU to assist and co-operate with each other for the
effective implementation of the Code, subject to limitations imposed by the
applicable laws. The MoU provides for:
(a) sharing of information
between the two parties, subject to the limitations imposed by the applicable
laws;
(b) sharing of resources
available with each other to the extent feasible and legally permissible;
(c) periodic meetings to
discuss matters of mutual interest, including regulatory requirements that
impact each party's responsibilities, enforcement cases, research and data
analysis, information technology and data sharing, or any other matter that the
parties believe would be of interest to each other in fulfilling their
respective statutory obligations;
(d) cross-training of
staff in order to enhance each party's understanding of the other's mission for
effective utilisation of collective resources;
(e) capacity building of
insolvency professionals and financial creditors;
(f) joint efforts towards
enhancing the level of awareness among financial creditors about the importance
and necessity of swift insolvency resolution process of various types of
borrowers in distress under the provisions of the Code, etc.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
MINDTREE INDEPENDENT DIRECTORS SHOULD GUIDE SHAREHOLDERS, SAYS
IIAS
Corporate governance and
proxy advisory firm IiAS has said the independent directors of Mindtree have a
key role to play in the ongoing tussle between Larsen and Toubro (L&T) and
Mindtree promoters to wrestle control of the company. L&T has mounted a Rs
10,700-crore bid to acquire controlling stake in Mindtree, where the promoter
group owns just 13.2 per cent stake. The independent directors of Mindtree must
provide guidance to the company’s shareholders on whether shareholders should
take up L&T’s open offer, says IiAS in a note, adding that investors will
not be in a position to understand all the nuances of the deal. Nearly 87 per
cent of Mindtree’s shares are with public shareholders, which includes marquee
foreign portfolio investors (FPIs) and mutual funds (MF). Cumulative FPI
holding in the company is more than 40 per cent. Some of the top overseas
shareholders of Mindtree include Nalanda, Amansa and Vanguard. Meanwhile, UTI
MF and L&T MF are domestic fund houses holding more than 1 per cent stake.
IiAS, in the note released on Tuesday, has not advised investors whether to
side with L&T or the promoters. L&T held an analyst conference to
discuss the Mindtree transaction. Meanwhile, Mindtree has scheduled an analysts
and investor call in the evening to discuss it’s reaction to L&T takeover
Bid. IiAS says independent directors are best-placed to provide guidance on
whether the L&T’s open offer is in the long-term interest of Mindtree.
L&T has said it will operate Mindtree as an independent entity. The battle
here is one of corporate culture and work ethos Corporate culture is a
fundamental basis for corporate governance and therefore a concern over its
change is a valid issue. Having said so, a change in corporate culture may not
necessarily be detrimental to employees or the company’s growth prospects. At
the same time, a services business is essentially driven by its people. If
Mindtree’s leadership and key employees leave (taking some clients with them)
following the takeover, it could have damaging consequences for the business,
says the IiAS note. None are better placed to take a dispassionate call than
the independent directors, who should know the company best. Given the nuances
of these issues, IiAS believes Mindtree’s board – essentially the independent
directors are best placed to articulate its stand on the several soft issues
that characterise this transaction, the note adds.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
NCLT BENCH ALLOWS FRESH BIDS FOR AMTEK ARM
After Amtek Auto, the
Chandigarh bench of the bankruptcy court has also allowed fresh bids for its
distressed unit Castex Technologies, with the winning bidder Liberty House
failing to pay 100 crore as the performance bank guarantee for resolution plan.
However, the National Company law Tribunal (NCLT) bench has said that while
seeking fresh bids, the resolution professional must also consider the second
highest bidder Deccan Value Investors (DVI). There is a clear default in not
complying with the essential terms and conditions of the process memorandum,
the court said in its written order published on Friday. Liberty House had
offered to pay 2,505 crore for Castex, which owes 7,313 crore to lenders. The
court has imposed a fine of Rs 10 lakh on Liberty House as exemplary costs for
making a mockery of the system of the CIRP process for which strict timelines
are provided.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
STERLING BIOTECH LENDERS SEEK WITHDRAWAL FROM SETTLEMENT PLAN,
SAYS REPORT
Sterling Biotech lenders
are looking to withdraw their decision to clear the one-time settlement plan
for stressed assets. The decision comes after they got a rap from the National
Company Law Tribunal (NCLT) for accepting the offer from promoters who have
fled the country. The debt-laden company owes Rs 8,100 crore to the banks and
the offer, which was made by the promoters of the Sandesara family, required 65
percent of bank haircuts, said the paper. The lenders, after accepting the
offer, filed a withdrawal plea with the NCLT, which will hear the case again on
March 26.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
IBC IS MASTERSTROKE IN CURBING BAD LOANS; NOW IRON OUT THESE
WRINKLES
The banking sector has
been reeling under stress for some time now, with non-performing assets (NPAs)
steadily climbing, hurting the asset quality of banks. Even as the government’s
recent measures to tackle the crisis have finally started to bear results, some
concerns remain. The two laws, Insolvency and Bankruptcy Code (IBC) and the
RBI’s Revised Framework for Resolution of Stressed Assets (RFRSA), however,
have helped to fix the problem to some extent in terms of improvement in
recognition, deterrence, resolution and speed, wrote Manish Sabharwal. The laws
has resulted in improving the asset quality of banks giving push to its credit
and deposit activities. This is a great news which may increase financial
inclusion of the small, honest, and non-politically connected, wrote Manish
Sabharwal. The RFRSA has fixed the defects of RBI’s past policy interventions
such as strategic debt restructuring (SDR), 5/25 refinancing, and Scheme for
Sustainable Structuring of Stressed Assets (S4A) etc. by requiring weekly
reporting by banks on all accounts in default anytime during the week with
exposure greater than Rs 50 million. India’s bad loans surged from 2.4 per cent
in 2007 to 11.6 per cent in 2018. However, with help of the two policies- IBC
plus RFRSA – it might have been now reduced to 10.2 per cent, wrote Sabharwal
in the article. Further, the impact RFRSA, which improved the identification of
such bad loans can also be assessed by the decline in the number of bad loans reported
for recent quarters, he added. Of the 82 accounts resolved by the IBC, the
average realisation by financial creditors was 48 per cent and average time
taken for resolution was 310 days (versus World Bank estimates of 27 per cent
and 1,580 days), said Mahesh Sabharwal. Sabharwal also lauds the recent Supreme
Court judgement of upholding the constitutional validity of the IBC,
identifying the relative position of secured and unsecured creditors, and
holding the line on Section 29A. However, he has also raised some points of
concern which are holding these policies back. Litigation hinders the
resolution process with only 3 cases of the RBI’s first IBC list of 12,
resolved so far. Moreover, only 63 of the total 1,484 cases admitted under the
IBC are likely to be withdrawn under Section 12A, recovery rates still remain
lower than global averages, and 31 per cent of the 898 ongoing insolvency cases
at the end of 2018 have breached the 270-day deadline, wrote Sabharwal.
Nevertheless, if taken care of these concerns, these reforms holds the
potential to improve India’s productivity, wages and prosperity, Manish
Sabharwal noted..
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RCOM STAVES OFF JAIL TERM FOR ANIL AMBANI, PAYS ERICSSON RS
462 CRORE
Reliance Communications
(RCom) has staved off a jail term of three months for its chairman Anil Ambani
by paying Swedish telecom equipment maker Ericsson dues of Rs 462 crore ending
the year long legal battle between the two companies. Ericsson's lawyer
confirmed receipt of the payment. As per Supreme Court’s orders, March 19 was
the last day to make the payment, which included penalty interests. The apex
court, in February, had held Ambani in contempt for not paying Ericsson’s dues
despite having the money to do so. The court threatened to send the
businessman, and the chairmen of RCom units Reliance Infratel and Reliance
Telecom — Chhaya Virani and Satish Seth — to jail if the money wasn’t paid in
four weeks. The battle between Ericsson and RCom started when the Swedish
company moved a bankruptcy court in 2017 alleging that it had not been paid
dues of around Rs 1,500 crore after signing a seven-year deal in 2013 to
operate and manage the telco’s nationwide network. The case moved from the
National Company Law Tribunal (NCLT) to the National Company Law Appellate
Tribunal (NCLAT) and then to the Supreme Court, which gave RCom two
deadlines–September 30 and December 15, 2018 –to repay dues, both of which were
missed by RCom. This prompted Ericsson to file three contempt petitions against
Anil Ambani, chairman of RCom, and its two units were party to the case.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RCOM, JIO TERMINATE ASSET SALE AGREEMENT BY MUTUAL CONSENT
The Reliance
Communications Group terminated its asset sales pact with Reliance Jio with
mutual consent, a BSE release said. Both the companies had entered into an
agreement for sale of RCom's assets in December 2017 as the Anil Ambani company
struggled with massive debt on its books. The deal was expected to cut RCom's
debt. The release cited a number of reasons behind the annulment of agreement.
The reasons cited are: Non-receipt of consents / objections from RCOM's over 40
foreign and Indian lenders, non-receipt of requisite permissions and approvals
from DoT, the decision taken by RCom to seek resiolution of its debt woes
through the bankruptcy code via NCLT among others. RCom staved off a major
crisis by paying Ericsson its dues thereby saving Anil Ambani from a
three-month jail term. RCom said that it is committed to resolve its debt troubles
through the NCLT process. The NCLAT will next hear the matter on April 8, 2019.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
ARCELORMITTAL GETS NCLAT'S CONDITIONAL NOD FOR RS 42,000 CR
ESSAR STEEL BID
The National Company Law
Appellate Tribunal (NCLAT) on Monday gave a conditional go-ahead to
ArcelorMittal’s Rs 42,000 crore-resolution plan for debt-laden Essar Steel
India Limited (ESIL) and said that the implementation will be subject to the
final outcome of the appeals moved by various people. The financial and
operational creditors of the company can be given the funds according to the
resolution plan, a two member Bench led by Chairperson Justice S J Mukhopadhaya
said. The Resolution Professional (RP) of the company will head the monitoring
committee which will ensure that ESIL remains a going concern, the NCLAT said.
While the appellate tribunal said it would look into the issue of equitable
distribution of funds to all financial and operational creditors, it refused to
stay the resolution process and asked the resolution professional to go ahead
with the implementation of ArcelorMittal’s plan. In case the NCLAT found any
discrepancies in distribution of funds, it would ask the respective parties to
refund part of the money they had already got, the two-member Bench said. The
observations by NCLAT came on a plea moved by Standard Chartered Bank
(StanChart) and the former promoters of Essar Steel. Though the NCLAT did not
stay the implementation of ArcelorMittal’s plan, it has asked the lawyers to
answer whether the appellate tribunal could substitute the resolution plan if
it did not balance payments for all the financial and operational creditors. It
has also asked if the operational creditors can be classified on grounds of
related and non-related parties It is also unclear whether ESIL would move the
top court against the NCLAT’s refusal to stay the implementation of the
resolution process.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
HC STAYS WADIA DEFAMATION PLEA HEARING AGAINST RATAN TATA,
OTHERS
The Bombay High Court
Monday stayed till March 27 the proceedings before a magistrate court in a 2016
criminal defamation case filed by Nusli Wadia against Ratan Tata and some other
directors of Tata Sons. A single bench of Justice Mridula Bhatkar stayed the
proceedings through an interim order. Justice Bhatkar will now hear a petition
filed by Tata and other directors of Tata Sons seeking quashing of the
defamation case against them on March 27. Therefore, Justice Bhatkar directed
the magistrate's court to refrain from proceeding with the hearing on the
defamation case until then. In December 2018, the magistrate court had issued
notices to Ratan Tata and other directors of Tata Sons in the criminal
defamation case filed by Wadia and then posted the matter for further hearing
on March 25, 2019. Wadia had claimed that Tata and the others had made
defamatory statements against him after they removed Cyrus Mistry on October
24, 2016 as the group chairman of Tata Sons. He said that he approached the
magistrate's court as he was not satisfied with the explanation the respondents
(Tata and others) had given him following his letters to them. He therefore
initiated defamation proceedings against the respondents under section 500 of
the Indian Penal Code.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
JET AIRWAYS SAYS NO MONEY TO PAY INTEREST TO DEBENTURE-HOLDERS
ON TUESDAY
Struggling Jet Airways
Monday said it does not have the money to pay interest to its debenture-holders
due Tuesday. This is the second time the airline is defaulting on its foreign
debt servicing since January 2, when it defaulted on repayments on its external
commercial borrowings. The airline, which has a debt of over Rs 8,000 crore,
did not specify what the quantum of interest due Tuesday nor quantum of the
debt on this particular account. The payment of interest due on March 19 to the
debenture holder will be delayed owing to temporary liquidity constraints, Jet
Airways said in an exchange filing Monday.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
ESSAR STEEL INCHING TOWARDS RESOLUTION
ArcelorMittal moved a step
closer to acquiring Essar Steel with the National Company Law Appellate
Tribunal (NCLAT) allowing the implementation of its Rs 42,000 crore resolution
plan for the debt-laden steel company, pending its final ruling. It asked
ArcelorMittal to deposit Rs 42,000 crore with the committee of creditors (CoC),
which may disburse funds but the distribution will be subject to the tribunal’s
ultimate decision. We are not going to interfere with the resolution plan. We
have not passed a stay order, said the two-member bench led by justice SJ
Mukhopahdyaya on Monday. We are looking into the question of apportionment to
creditors. Essar is not likely to appeal against the decision in the Supreme
Court, said people with knowledge of the matter.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
IDBI BANK MOVES NCLT AGAINST OSIAN’S CONNOISSEURS
Private lender IDBI Bank
has approached the National Company Law Tribunal (NCLT) against Neville
Tuli-promoted arthouse Osian’s Connoisseurs of Art Pvt Ltd for the default of
about Rs 125 crore The Reserve Bank of India has classified the previously
state-owned bank as a private lender from January 21, 2019. Mumbai-based
Osian's Connoisseurs is considered to be the country's pioneering arts
institution and auction house, which houses an archive, library and a
collection of antiquities, miniatures, sculptures and other cultural artefacts.
Two persons familiar with the development said the lender has approached the
Mumbai bench of the National Company Law Tribunal (NCLT). The company was
declared a Non-Performing Asset (NPA) on March 2010, however, later, certain
loans were restructured. The bank has decided to propose Girish Sriram Juneja
as interim resolution professional (IRP) at the National Company Law Tribunal,
said one of the people quoted above. The properties of the company also include
‘Minerva Theatre,’ an iconic single screen theatre of yesteryears situated in
tony South Mumbai locality and its office located in Nariman Point area as
securities. As per the audited accounts of Osian’s Connoisseurs, as on March
2018 the current assets of the Neville Tuli-owned company stood at Rs 106 crore
including artworks. The company had tried for One Time Settlement (OTS) with
the lender from 2014 to 2016 but that did not materialise. Recently, the bank
also appointed valuers to help the resolution and we readily agreed to the
process. Now this NCLT decision has been taken by the bank, which is their
privilege, said the company in its response. They will need to consult with other
parties and all related legal counsel as they only have a pari-passu charge on
the assets. Whatever process is taken forward, we will support a just
resolution, it added.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
FORMER IL&FS FINANCIAL SERVICE DIRECTORS SAY THEY WEREN'T
TOLD OF BOARD'S DECISIONS
At least two directors of
the erstwhile IL&FS Financial Service (IFIN) have said they were kept out
of the loop on major decisions taken by their board in their response to show
cause notices (SCN) issued by the new board of Infrastructure Leasing and
Financial Services (IL&FS). IFIN is a subsidiary of IL&FS. However, the
newly constituted board is of the view that these directors failed in their
duties of keep a tab on the functioning of the firms and failed to raise red
flags, sources in the know told. Neera Saggi, who was director between 2015 and
July 2016, and Renu Challu, who was director in 2018, have both claimed they
were innocent of all decisions of the board. Both have replied to the SCN
claiming that the decision was taken by Ravi Parthasarathy, Hari Sankaran and
RC Bawa at the helm and that they were mere signatories. We aren’t buying their
excuses as the credit administration report is presented before the board
quarterly and even if they were with the company for a year or so, they failed
to raise red flags, said a director of the current board, who requested
anonymity. Once the report is presented, there is detailed discussion on issues
like fresh loans sanctioned, recovery position, default by borrowers and the
action taken till then, how the company is dealing with NPAs and loans written
off, said the board member. Many irregularities have been found like loans
sanctioned despite negative or limited spread for companies in financial
distress. In certain cases loans were approved even after negative assessments
by the infrastructure financier’s risk team. These members despite being aware
of these irregularities did not question the board for failing to the curb
crisis, the above cited official said. Meanwhile, the new board has given
another week to former board members like Parthasarathy, Sankaran and Bawa, who
have sought documents. To every director, we have cited the exact alleged
irregularities committed by them. The directors have sought documents pertaining
to loans sanctioned by them. We have sent them on pen drives, which would be
provided to them. An additional week’s time has been given to for their
replies, said another official. These sources add that of the 14 directors who
were served SCNs only Manu Kochhar, who was the director between 2014 and March
2015, wasn’t in the position to reply as he wasn’t in the country. He too has
been given a week’s time to reply. The SCN to Parthasarathy demands an
explanation on why a loan of Rs 2,400 crore was sanctioned to 18 entities
despite the negative risk assessment group sanctioning loan of Rs 1,922 crore
to 16 entities without recording any cogent justification. It imputed that the
action was culpable for facilitating money laundering by diverting loan amount
to the individual account of the director of the borrower company for extended
loan for criminal intent of falsification of repayment by a number of
borrowers, the four-page SCN said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
ERICSSON TEACHES ANIL AMBANI AND INDIA'S NASCENT BANKRUPTCY
SYSTEM A LESSON
Anil Ambani’s not going to
jail after all and Ericsson AB got its money. The Swedish company’s lawyers
should take a bow. While the future of the Indian tycoon’s shrinking empire
remains shrouded in uncertainty, at least questions over his near-term living
arrangements got answered on Monday. Ambani thanked his respected elder
brother, Mukesh, and sister-in-law, Nita, after avoiding a three-month prison
term India’s richest man showed up just in time to help his younger sibling who
has, in a little over a decade, lost 99 percent of his $31 billion net worth.
The local unit of Ericsson had accepted a Rs 5.5 billion ($80 million)
settlement to keep its petition for Reliance Communications Ltd.’s $7 billion
bankruptcy in abeyance. The telecom equipment vendor subsequently won a
contempt-of-court order to put Chairman Anil Ambani in jail if the long-delayed
payment – which he personally guaranteed – wasn’t received by Tuesday.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
WILL RECOVER DUES FROM RADHA SOAMI HEAD, OTHERS: MALVINDER
SINGH TO SUPREME COURT
Facing a Singaporean
arbitration award to pay Rs 2,562 crore to Daiichi Sankyo, erstwhile owner of
Ranbaxy Malvinder Singh told the Supreme Court that he was confident of recovering
Rs 6,277-crore loans and advances given to Radha Soami Satsang Beas’s spiritual
head Gurinder Dhillon, aka Babaji, and his family members. In his affidavit
before the SC, Malvinder, as director of Oscar Investment and RHC Holdings,
said loans and advances amounting to Rs 6,277.34 crore was recoverable from
Dhillon and members of his family, besides companies owned by them — Prius
group, Religare group, Narinder Ghoshal and the Godhwani family (Sunil Godhwani
and Sanjay Godhwani). Demand notices have been sent by Oscar Investment and RHC
Holdings as well as other companies, which in turn could be released to the
petitioners (Daiichi) by the Delhi high court in accordance with the garnishee
orders passed by the HC, Malvinder said. In a ‘garnishee’ order, the court
directs a third party (persons who owed money to Malvinder’s firms) to pay
Daiichi instead of paying the debt to Malvinder’s companies.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
HOTEL LEELAVENTURE TO SELL 4 PROPERTIES TO BROOKFIELD FOR ₹3,950 CRORE
Canada’s Brookfield Asset
Management has agreed to acquire four hotels and a land parcel from India’s
Hotel Leelaventure Ltd for ₹3,950 crore, in what would be the largest-ever hotel deal by
value in India. The deal culminates more than a year of talks between
Brookfield and various stakeholders of debt-laden Hotel Leelaventure, which has
been in the middle of financial restructuring. The board of Hotel Leelaventure
approved on Monday the sale and transfer of four of its hotel properties to an
affiliate of BSREP III, Brookfield’s latest real estate fund. The luxury hotel
chain owns five hotels, comprising more than 1,400 rooms, in New Delhi,
Bengaluru, Chennai, Mumbai and Udaipur. The deal will exclude the hotel in
Mumbai while including the land parcel in Agra. The Brookfield-Leela deal will
also entail buying the Leela brand, existing and all upcoming management
contracts of Hotel Leelaventure and also absorbing the employees of the four
hotels, the two companies said in a joint statement. The Leela is one of the
finest hospitality groups in India and over the years it has gained
extraordinary recognition from some of the most prestigious authorities on
travel and luxury in the world. We are excited with this opportunity and look
forward to completing this transaction at the earliest, while ensuring that all
operations remain unaffected, said Ankur Gupta, managing director and
head-India Real Estate, Brookfield Asset Management.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RBI ASKS NCLAT TO ALTER IL&FS LOAN ORDER
The RBI has asked the
National Company Law Appellate Tribunal (NCLAT) to clarify or modify its order
asking banks not to classify loans to IL&FS group entities as nonperforming
assets (NPAs) without its permission. In the petition, which is expected to be
heard by the Tribunal on Tuesday, the regulator has sought to be a respondent
in the case and argued that as the regulator for banks and financial
institutions it has issued guidelines for declaring a loan as a NPA and as part
of its duty is also bound to monitor its implementation. The regulator has
argued that its prudential norms are constitutionally as well as legally valid
and no order or direction can be passed restraining the financial institutions
from complying with these norms provided for under the RBI Act and the Banking
Regulation Act as it will have far-reaching overall repercussions and cascading
effect in the banking sector and the interests of the depositors would be
jeopardised. If the banks and financial institutions implement the orders of the
Tribunal, it would lead to a situation where the statutory
instructions/guidelines/ circulars issued by the RBI become infructuous, the
petition said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
INDIA SURPASSES ITALY FOR WORLD'S WORST SOURED-LOAN RATIO
India holds the dubious
distinction of having the worst non-performing loan ratio among the world's
major economies, having surpassed Italy. The Reserve Bank of India said in
December that the ratio for banks fell for the first time since 2015, though
it's still high for comfort. A US$190 billion pile of soured and stressed debt
has cast the future of some lenders in doubt and curbed investments. Italy
succeeded in quickly reducing its bad-loan ratio, with non-performing loans
falling to about 200 billion euros (S$306.5 billion) last year from their peak
of over 360 billion euros in 2016.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SEBI PERMITS TRADING IN COMMODITY DERIVATIVES ON IFSC STOCK
EXCHANGES
Eligible Foreign Investors
(EFIs) can participate in commodity derivatives trading on stock exchanges
located at the International Financial Services Centre (IFSC), Sebi said on
Monday. However, the participation is subject to certain conditions laid down
by the regulator, like it would be limited to the derivatives contracts in non-agricultural
commodities only, Sebi said in a circular. The Securities and Exchange Board of
India (Sebi) said the contracts would be cash-settled on the settlement price
determined on overseas exchanges. Besides, the transactions shall be denominated
in foreign currency only, the circular added. FPIs (Foreign Portfolio
Investors) were allowed to trade in commodity derivatives on IFSC in 2017 with
subject to similar conditions. In March 2016, the watchdog permitted trading in
commodity derivatives at stock exchanges operating at the IFSC. Gujarat
International Finance Tec-City (GIFT City) is the first IFSC in the country.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CIRCUIT FILTERS ON DERIVATIVES STOCKS TO ADD VOLATILITY: FPIS
Foreign portfolio
investors (FPIs) have expressed concerns over the market regulator’s proposal
to impose circuit filters on the stocks that trade in derivatives market. In a
letter addressed to the Securities and Exchange Board of India (Sebi), leading
FPI lobby Asia Securities Industry and Financial Markets Association (Asifma)
said such a move could induce more volatility and distort market equilibrium
The foreign fund lobby body suggested that Sebi should undertake more
comprehensive impact study to understand how the proposed measures would impact
F&O stocks. The market regulator had floated a discussion paper in January
proposing introduction of circuit filters for scrips that are traded in the
derivatives market. In the discussion paper, Sebi had talked about two
different proposals: one to put in place hard circuit filters which would be
triggered if any scrip moves over 20 per cent either way. The other proposal
was to introduce a combination of dynamic and fixed price bands or a call
auction mechanism. Asfima said the first proposal would be disadvantageous for
option buyers whose premium is decided by the market volatility and the
duration of the contract. Enforcing fixed limits may result in a manufactured
loss for option buyers as the underlying price moves become restricted after certain
point. It is unclear what the unintended consequences might be as market
equilibrium becomes distorted, said Asifma in the letter. Also, having such
hard limits could make many derivative positions out of money, increasing
market volatility. On the second proposal of introducing combination of dynamic
and fixed price bands or call auctions, Asifma said it could create challenges
on timely re-computation of the indices Given the current dominance in the
market by retail investors, such a complexity may cause more damage to retail
investors first than to other market participants, Asifma said. Retail
investors contribute approximately 25 per cent to the country’s total equity
derivatives volumes. Alternatively, the FPI lobby has suggested Sebi to introduce
circuit breakers to derivatives in the similar lines as the cash market. Such a
framework would stop any sudden fall in the prices and curtail unnatural
volatility in the market. Currently, stock exchanges have circuit breakers in
place for indices in the cash market.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
COUNTING ON BETTER TIMES
Since fiscal 2016, when
the RBI had undertaken the asset quality review (AQR), earnings of most public
sector banks and a few private sector banks with higher exposure to corporate
loans, were under pressure. Sharp bad loan divergences revealed after the RBI’s
annual risk-based assessment over the past two years also exacerbated these
banks’ asset quality woes. Axis Bank had a relatively higher exposure to
stressed sectors compared to peers. In line with the overall trend in the
banking sector, the bank’s asset quality too deteriorated between FY16 and
FY18. Over the past three quarters, however, the tide appears to be turning
gradually. Substantial reduction in the bank’s stressed book, steady
improvement in core performance and strong traction in high-yielding retail
loans are key positives that have led to the stock being re-rated sharply over
the past nine months. While the steep rally can limit the upside in the near
term, Axis Bank’s large network, thrust on digitalisation, diversified loan
book, and strong retail franchise are long-term drivers for earnings. At the
current price, Axis Bank trades at 2.5 times its one-year-forward book value.
This is significantly higher than the 1.8-2 times that the bank had been
trading at over the past two years. But prior to FY16, when the bank had a
strong track record of earnings the stock used to trade at 2.8-3 times its
one-year-forward book value. Hence, from the current levels, there is scope for
further re-rating if there is substantial improvement in earnings. The bank’s
return on equity (ROE) was in the 17-18 per cent range between FY14 and FY16,
which slipped considerably in the past two fiscals. A significant re-rating of
the stock hinges on scaling up profitability and return ratios, and improving
asset quality. Long-term investors with a three-five-year horizon can consider
buying the stock on declines linked to the broader market. On the core business
front, pick-up in the bank’s net interest income growth in recent quarters has
been heartening. From flat to low single-digits, growth in net interest income
had inched up to 12 per cent in the June quarter, aided by a one-time impact of
interest realisation from recovery on an IBC account. In the September quarter,
the bank’s NII has grown by a higher 15 per cent (no one-off recoveries). In
the December quarter, NII has grown by a healthier 18 per cent. While the
bank’s growth in corporate loans remained muted at 4 per cent Y-o-Y (as of
December 2018), retail loans grew at a healthy 20 per cent, driving the overall
loan growth. The growth in retail loans has been driven by segments such as
personal loan, credit cards etc, with their share in the overall retail loan
mix inching up over the past two years. The bank’s NIMs (domestic) have
remained steady in recent quarters, at 3.6 per cent. An overall weak deposit
growth within the banking sector and intensifying race to garner low-cost
savings deposits could, however, exert some pressure on NIMs. For Axis Bank,
the uncertainty over asset quality is not completely out of the way. It
reported sharp slippages of Rs. 16,536 crore in the March quarter, while gross
slippages fell to Rs. 4,337 crore in the June quarter and further to Rs. 2,777
crore in the September quarter. In the latest December period, however,
slippages inched up to Rs. 3,746 crore, which may need to be monitored in the
coming quarters. The bank’s BB and below-rated book has shrunk substantially
over the last two years. From a peak of Rs. 27,411 crore in the June 2016
quarter, the low-rated book is now reduced to Rs. 7,645 crore. Given that about
90 per cent of slippages (on an average) in the past several quarters have come
from BB and below-rated book, the significant shrinkage is a positive. About 98
per cent of the corporate slippages in the December quarter came from the
bank’s BB and below-rated book. After reporting bad loan divergences to the
tune of Rs. 9,478 crore pertaining to FY16, Axis Bank had reported another Rs.
5,600-odd crore of divergences as of FY17. While the indicative list from the
RBI for FY18 suggests a much lower Rs. 225 crore of divergence, any deviation
in the final annual risk-based supervision report may need monitoring.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
APPOINTMENT NOTIFICATION OF MEMBER, CCI
In exercise of the powers
conferred by sub-section (1) of section 8 read with sub-section (1) of section
10 of the Competition Act, 2002 (12 of 2003), the Central Government, vide
office order No. Comp-05/9/2018-Comp-MCA dated the 11th December, 2018,
appointed Ms. Sangeeta Verma as Member of the Competition Commission of India
with effect from the 24th December, 2018 (Afternoon) for a period of five years
or till 65 years of age, or until further orders, whichever is the earliest.
The terms and conditions of her service shall be governed by the Competition
Commission of India (Salary, Allowances and other Terms and Conditions of
Service of Chairperson and other Members) Rules, 2003.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
GENERAL INSURERS' PREMIUM RISES 23% TO RS 12,959 CRORE IN
FEBRUARY: IRDAI
General insurers
registered 23 per cent growth in their premium at Rs 12,959.44 crore in
February, data from Irdai showed Monday. The gross premium collected by all the
34 insurers in the general sector stood at Rs 10,573.70 crore during the same
month a year ago. In a break-up of premium collected by these firms, the
Insurance Regulatory and Development Authority of India (Irdai) showed that 25
of these firms garnered Rs 10,916.33 crore premium during February 2018-19, a
18.1 per cent rise over the same period last fiscal. Among others, seven
standalone private sector health insurers registered a rise of 38 per cent in
their premium at Rs 1,123.08 crore. The two specialised PSU insurers --
Agricultural Insurance Company of India Limited and ECGC Limited -- had a
collective premium of Rs 920.03 crore during the month, registering a growth of
nearly 80 per cent. The cumulative premium during April-February 2018-19 of the
34 insurers rose by 13.43 per cent to Rs 1,52,097.04 crore as against Rs
1,34,084.94 crore, showed the Irdai data.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
L&T SET TO BUY 20% IN MINDTREE FOR ₹3,269 CR IN HOSTILE
TAKEOVER BID
In what is billed as
Corporate India’s first hostile takeover bid in the IT sector, Larsen &
Toubro Ltd on Monday said it has entered into a definitive share purchase
agreement with VG Siddhartha and his related entities, Coffee Day Trading Ltd
and Coffee Day Enterprises Ltd, to acquire a 20.32 per cent stake in Mindtree.
L&T will purchase this stake at ₹980 per share, aggregating
to approximately ₹3,269 crore. Immediately following the filing of the public
announcement, L&T placed an order with its broker for on-market purchase of
up to 15 per cent of share capital of Mindtree at a price not exceeding ₹980
apiece. It has announced an open offer as per SEBI takeover regulations to the
public shareholders of Mindtree to purchase up to an additional 31 per cent of
the outstanding shares of Mindtree at a price of ₹980 per share in cash.
This acquisition adds to L&T’s IT services platform
with a focus on new-age digital/cloud solutions, making it highly complementary
to L&T’s current technology services portfolio, a statement from the
company said. Mindtree would remain an independent listed entity, it added. This
acquisition will help propel L&T’s technology portfolio into the top tier
of Indian IT companies. Mindtree has a well-established management team which
has earned the respect of the market in terms of its service offerings and
business practices, said SN Subrahmanyan. Meanwhile, Mindtree founders are
bracing for a pitched battle to stall any such attempts On March 15, the
company’s board said it would meet on March 20 to consider the buyback option.
The company’s reserves as of now are around ₹2,800 crore. It means that
it can allocate around ₹280 crore for the buyback of the company’s
shares and also another ₹700 crore to buy another 25 per cent stake to take control of
the company.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
L&T'S HOSTILE TAKEOVER BID FOR MINDTREE GETS THUMBS-DOWN
FROM ANALYSTS
Larsen & Toubro’s
(L&T’s) hostile takeover bid for MindTree at Rs 980 per share in an
all-cash transaction has got a thumbs-down from analysts. The hostile takeover,
if goes through, will be a misfit for the engineering and construction giant,
at least in the short term. On Monday, L&T entered into a deal to purchase
the 20.32 per cent stake of MindTree’s single-largest investor, V G Siddhartha,
at Rs 980 per share in an all-cash transaction. L&T now plans to buy an
additional 15 per cent from the market at Rs 980 per share, for a consideration
of Rs 2,434 crore. The price offered to shareholders as part of the open offer
for an additional 31 per cent and also to the Cafe Coffee Day promoter is just
1.81 per cent higher than the Monday closing price of Rs 962.50 at the BSE.
Ideally, in case the single-largest investor, V G Siddhartha wanted to exit,
MindTree's other promoters should have bought the stake. For L&T, I think
the takeover will be a mis-fit, at least in the short-run. Reports suggest that
L&T will keep MindTree as a separate company and not merge it with L&T
Infotech. Even if a merger happens, it will take three - four years for the
synergies to flow seamlessly. From a short-term perspective, I am not bullish
on both these stocks says A K Prabhakar, head of research at IDBI Capital. On
Tuesday, L&T slipped 1.5 per cent in intra-day deals to Rs 1358 levels on
the National Stock Exchange (NSE), while MindTree lost 1 per cent to 953
levels. The Nifty50 was trading flat at 11,460 levels. Analysts at Jefferies,
too, believe the takeover will not be in line with L&T's focus on listing
non-core businesses and enhancing shareholder value.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
IT'S PYAAR, NOT WAR: L&T CEO SUBRAHMANYAN ON MOVE TO
ACQUIRE MINDTREE
L&T move to acquire
should not be seen as hostile, said the firm's CEO SN Subrahmanyan, assuring
shareholders of both the firms that the move should been seen with love and
consideration. There are certain emotions and trepidation involved, but
business is business. Emotions do play a part, but emotionalities have to be
overcome as we go forward What we are trying to do, is with, if I can use the
word ‘pyaar’ , and we will continue to look at it as something we are doing
from our ‘dil’. And we will continue to look at it with the same manner and
purpose, he said at a presser on Tuesday. Subrahmanyan said VG Siddharatha of
Mindtree approached the firm a few months back to look at his 20 percent stake
in the company. L&T’s immediate reaction was neutral, but we continued our
dialogue with him. From our point of view, the move made a lot of sense from
our IT portfolio point of view. We also had dialogue with the Mindtree
management. Larsen & Toubro is making an aggressive attempt to acquire the
IT services company, almost a decade after it had lost the race to acquire
scam-struck Satyam Computers. This acquisition could give L&T the scale
that it has long desired. But acquiring the desired holding in the company may
not be easy. I think it fits into the larger plan, chairman of L&T Group,
AM Naik told, when asked if Mindtree was a right fit for L&T. The
engineering conglomerate signed a deal with Café Coffee Day founder VG
Siddhartha to buy his 21% stake in Mindtree, and announced plans to make an
open offer for an additional 31% in the IT company. The company could
potentially spend $1 billion to acquire controlling stake in Mindtree, in what
is being seen as a hostile takeover that would be a first in India’s IT
industry.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
COAL INDIA'S SPARK DIMINISHES FURTHER AS DIVIDEND PAYOUT
DISAPPOINTS
Dividends have always been
Coal India Ltd’s strong suit. This year, however, isn’t looking bright for
investors on this count. The company’s interim dividend of ₹5.85
per share, announced last week, is lower than the Street’s expectations. With
this, the coal producer’s cumulative dividend so far for this fiscal year
stands at ₹13.1 per share. For FY18 and FY17, Coal India's dividend stood
at ₹16.5 and ₹19.9 per share, respectively. Interestingly, payouts are lower
in a year when profits are relatively higher. Year to fiscal year 2019 payout
of 54% (of net profits) is far lower than that for the past three years when
the payout exceeded 125% on every instance, said analysts from Edelweiss
Securities Ltd in a report on 15 March. According to Edelweiss, the company’s
annual capital expenditure (capex) requirement of ₹12,000–15,000
crore to maintain volume growth of 5% is likely to keep dividend yield muted
hereon. Analysts are not excited about the growth prospects either. The
benefits due to capex are not obvious as the incremental profit due to
increased production is at best enough to cover cost inflation, wrote analysts
from HDFC Securities Institutional Research in a report on Coal India in
December. So, unless the company makes up by paying a final dividend later,
investors will feel let down.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
AZIM PREMJI TRUSTS GET A SHARE OF HIS WEALTH, BUT NOT VOTING
RIGHTS
Billionaire Azim Premji’s
two charities have been made partners in three companies that hold his 56%
stake in Wipro Ltd, allowing the trusts to receive monetary gains from the
shares even as Premji can retain the voting rights, a person aware of the
development said. The two charitable trusts—Azim Premji Philanthropic
Initiatives Pvt. Ltd (APPI) and Azim Premji Trust (APT)—have, however, stayed
away from voting on any resolutions pertaining to Wipro. The trusts also can’t
nominate members to Wipro’s board, the executive said, requesting anonymity.
After last week’s transfer of 34% of economic ownership of Wipro shares to the
charitable trusts, Azim Premji Philanthropic Initiatives and Azim Premji Trust,
will not only own and get economic benefits from 14% in the company, but will
also stand to earn money from an additional 53% of Premji and his family’s
total 74.29% stake in the company. Our approach is a simple one. The trust
focuses on funding philanthropic initiatives. The board and management of the
company focuses on the company operations, said K.R. Lakshminarayan. Azim
Premji Philanthropic Initiatives and Azim Premji Trust, since being inducted as
partners of the three partnership firms, will receive all monetary benefits
accruing from 53% of Wipro’s shares, while Premji will retain the remaining 3%
shares held by these partnership firms. This means Premji and his family will
get dividends and any other economic benefits from only 7% of shares in Wipro,
while 67% of the proceeds will go to the Azim Premji Endowment fund, the corpus
of which swelled to $21 billion as of 13 March. Corporate governance in India
enters a new era with Mr Premji’s magnanimous action of transferring a
significant portion of his beneficial interest in Wipro shares, said Shankar
Jaganathan, a tech solutions provider for compliance standards. This move has
the potential to impact governance practices in Indian companies by getting the
investors and regulators to give equal importance to the intent of the
promoters as they give to their actions, said Jaganathan.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
KARNATAKA RERA IN, BUT WEBSITE LACKS MANY DETAILS
The formation of a
permanent Real Estate Regulatory Authority in Karnataka (KRERA) has raised the
hopes of home-buyers waiting for a strong monitoring agency for real estate.
The new body, however, is yet to bring in transparency by adopting information
technology. A quick look at the KRERA website gives out basic information about
the agency, the list of RERA registered projects, unregistered projects, etc.
But the website misses out on some crucial information that homebuyers have
been demanding. While the website puts out the list of complaints against project
proponents, copies of the complaints are not available. Same is the case with
order copies. Judgement copies are not uploaded real time or after a short gap
of the authority pronouncing a judgement. In addition, getting through the
portal itself is complex unlike in other states like Maharashtra where the
portal gives direct access to anyone looking for information. Karnataka’s RERA
website is password and username protected, thereby limiting access to
prospective and existing buyers, or anyone else. Though the RERA has mandated
registered projects to submit quarterly updates, the details are not put
online. One officer who worked with K-RERA and tried to put information in the
public domain during his brief term there said that solutions related to RERA lies
in IT. The system has to be streamlined and made transparent. More has to be
done, including sending emails to the project proponents instead of sending
them posts, publishing complaints and judgements, etc, the officer said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
WOMEN IN THE BOARDROOM CHALLENGE UNCONSCIOUS BIAS, BRING
DIFFERENT PERSPECTIVE: IREENA VITTAL
If there is something to
know about being an independent director, Ireena Vittal. She sits on several
boards, including companies like Wipro, Zomato and Titan. So, her words on how
having a woman on the board helps must be heeded. I don’t think that women
directors are more intelligent or less intelligent than men I don’t think they
are more sincere or less sincere. I don’t think they care more about HR and
people than men. I just think that women directors are different, Vittal said.
According to her, women challenge unconscious bias. She cited the example of
one of the companies whose board she sits on. We were setting up this annual
campaign. It was to be a competition and the team came back with a list of jury
members and all of them were men. It’s a wonderful company, (headed by a) very
thoughtful CEO. It just hadn’t struck them that they needed to have a
representative jury member. Just by being there you challenge unconscious bias
which a lot of people are not even aware of, she said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SBI’S RS 20,000 CRORE FUNDRAISE: BOARD TO MEET LATER THIS WEEK
FOR TIMELINE EXTENSION
With an aim to consider
extension of timeline for raising funds State Bank of India (SBI) on Monday
said that the central board will meet later this week to consider extension of
approval accorded by it for raising equity capital of up to Rs 20,000 crore
from the market till end of FY20. A meeting of the central board of the bank is
scheduled to be held on March 22, 2019 to consider inter alia the extension of
approval accorded by central board for raising equity capital of up to Rs
20,000 crore from the market till March 31, 2020, SBI said in an exchange
filing. It was in December 2018, the SBI shareholders tendered their approval
to the fundraise plans of worth Rs 20,000 crore. The modes of raising funds
include a follow on public offer (FPO). Meanwhile, in a first-of-its-kind move
that will ensure faster monetary transmission SBI, which controls nearly a
quarter of the banking system, announced linking of its savings deposits rates
and short-term loans to the RBI’s repo rate.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CENTRAL BANK TO RAISE UP TO RS 270 CR BY ISSUING SHARES TO
EMPLOYEES
Central Bank of India will
raise up to Rs 270 crore by issuing shares to its staff under the employee
share purchase scheme (ESPS). The bank’s board on Monday approved a proposal to
raise equity capital by issuance and allotment of up to 10 crore shares at the
issue price of Rs 27 per share, Central Bank of India said in a regulatory
filing. The shares under the scheme will be allotted to eligible employees, it
said. The compensation committee of the board fixed issue opening date as March
19, 2019 and issue closing date as March 27, 2019 subject to provision that the
issue closing date can be revised and preponed or postponed with approval of
the Committee, the bank said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
IBC JUDGMENT: THE DEFAULTER'S PARADISE IS LOST
Hon’ble Supreme Court of
India in the matter of Swiss Ribbons Pvt. Ltd. & Anr. v. UOI & Ors
(lead matter) wherein the constitutional validity of the Insolvency and
Bankruptcy Code, 2016 (the Code) has been upheld. The issues that were argued
by the parties were respect to the preamble and approach of the Code, about
NCLT and NCLAT, classification into financial creditors and operational
creditors, notice, hearing, set off or counterclaim qua financial debts,
operational creditors and committee of creditors, Section 12A vis-Ã -vis Article
14, information utilities, power of Resolution Professional, constitutional
validity of Section 29A, addressing hardship arising from and monitoring the
working of the Code, Section 53 vis-Ã -vis Article 14, constitutional validity
of the Code and working of the Code. Upon considering the submissions
forwarded, the Supreme Court thought it fit to first give a brief background of
the Insolvency Law in India. The problems with the erstwhile bankruptcy law
were highlighted. Lack of clarity of jurisdiction and the need for a single
forum for adjudication was emphasized as opposed to multiple judicial fora
(BIFR under SICA & Liquidation under Companies Act, 1956). It further
classified the erstwhile regime as fragmented and prone to contrary judicial
outcomes. The average time to resolve bankruptcy in India according to a 2014
World Bank report was stated to be 4 years, which was comparatively very high.
Quoting the Eradi Committee Report relating to insolvency and winding up of
companies dated 31.07.2000, the utility of the Sick Industrial Companies
(Special Provisions) Act, 1985 was questioned. The Supreme Court further
emphasized the need for the courts of law to be cautious while interfering with
legislation passed especially in social and economic fields. Legislation
ideally should not be interfered with unless it is patently arbitrary and
perverse A need for consolidation of the insolvency process amalgamating
various statutes governing the field such as Sick Industrial Companies (Special
Provisions) Act, 1985, the Recovery of Debts Due to Banks and Financial
Institutions Act, 1993, the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 and the Companies Act,
2013 was outlined. Stress was placed on a time-bound outcome which directly
links with the value of assets. A single scheme would result in benefitting all
stakeholders in a holistic and natural way. Credit markets would also be
developed and the ultimate goal of overall economic growth and development
would be met. Liquidation is provided for, as a last resort and the Code is a
beneficial piece of legislation. It aims at supporting the corporate debtor in
a positive way to recover and not merely a tool for recovery from the
creditors. Circuit Bench of NCLAT was directed to be set up within a period of
6 months. In terms of the Madras Bar Association Case, it was directed that the
administrative support for tribunals needs to shift to the Ministry of Law and
Justice and not the Ministry of Corporate Affairs. The classification between a
financial creditor and operational creditor was found to be neither
discriminatory nor arbitrary nor violative of Article 14 of the Constitution of
India. It was further observed that financial creditors i.e. banks and
financial institutions (secured creditors) would be smaller in number than
operational creditors (unsecured) of a corporate debtor. It was held that there
existed clear intelligible differentia qua financial creditors and operational
creditors. An important move was also sought to be made with the bringing of
the Code. The policy saw a shift from inability to pay debts to the
determination of default The triggering of the Code by financial creditors and
by operational creditors is differentiated as financial creditors have to prove
default while an operational creditor merely claims a right to payment. The
Court has explained this by stating that a claim gives rise to a debt only when
it becomes due and a default occurs only when a debt becomes due and payable
and not paid by the debtor. On the aspect of operational creditors having no
vote in the committee of creditors, it was observed that financial creditors
are in the business of money lending and therefore banks and financial
institutions are best equipped to assess viability and feasibility of the
business of the corporate debtor. Even at the time of granting loans, these
institutions undertake a detailed market study and thus they are in a good
position to evaluate the contents of a resolution plan. With respect to
operational creditors, it was observed they are only involved in the recovery
of amounts for goods and services and are typically unable to assess the
viability and feasibility of business. Furthermore, the same treatment is given
to operational creditors and financial creditors. Withdrawal of application
admitted under sections 7, 9 or 10 of the code was held to be not violative of
Article 14 of the Constitution of India. Such proceedings being in rem
necessitate the consulting of the body overseeing the resolution process before
settling of the claim by any corporate debtor. The limit of 90% of the
committee of creditors having to approve the withdrawal is justified as
ideally, all creditors need to be involved in the process. Furthermore, any
arbitrary decision is subject to judicial challenge thus safeguarding against
the concerns raised on behalf of the petitioners. Regarding the assault on
private information utilities, it has been observed that they are subject to
stringent requirements such as expeditious authentication and verification. No
adjudicatory powers have been given to resolution professionals. The resolution
professionals are given administrative powers only as opposed to quasi-judicial
powers as had been sought to be canvassed by the petitioners. Juxtaposing the
powers of the liquidator and of the resolution professional, a clear
distinction emerges as to the nature of their powers. A determination of the
value of claims by the liquidator is quasi-judicial in nature and amenable to
review by the Adjudicating Authority. Lastly, as compared to the liquidator the
resolution professional is fettered by approvals required from the committee of
creditors and their general oversight. Another major concern raised by the
petitioners was to the constitutional validity of Section 29A of the Code
dealing with persons not eligible to be resolution applicant. Following the
judgment in the matter of ArcelorMittal, it was held that since a resolution
applicant applying under Section 29A(c) has no vested right, no fault can be
assigned. The aspect of no vested right has been also expanded to counter the
argument of the erstwhile promoter who may alone purchase the immovable and
movable properties sold in liquidation piecemeal by public auction or by
private contract. Ineligibility of persons under Section 29A of the Code
includes malfeasant persons or persons otherwise in default of the law of the
land or people unable to pay their debts in the mandated period thereby
creating a barrier from purchasing the assets of the corporate debtor who is
either a willful defaulter or otherwise. In so far as the period of one year
prescribed in terms of Section 29A is concerned, a reference to the RBI
guidelines is mandatory. In terms of the said circular, accounts are declared
NPA only if defaults made by the corporate debtor are not resolved within a
period of one year and three months resulting in the asset being classified as
a substandard asset. Thereafter, the person becomes ineligible to become a
resolution professional. It was further clarified that Related Party would
cover both natural as well as artificial persons The argument of connected
persons in terms Explanation I, clause (ii) of Section 29A(j) of the Code not
being referred to a person in the management or control of the business of the
corporate debtor in the future was negated by stating that such an
interpretation would be arbitrary as in such a case the explanation would then
apply to an indeterminate person. It was further stated that the Explanation I
covers a person who is in management or control of the business of the
corporate debtor during the implementation of the resolution plan, if the
person is otherwise covered under the definition of connected persons. With
respect to the exemption of micro, small and medium enterprises from the ambit
of Section 29A of the Code, it was observed that this was necessary as due to
their structure other resolution applicants may not be available, leading to no
resolution at all. This would lead to a scenario where liquidation becomes the
default result, which goes against the very fabric of the Code. A challenge to
Section 53 of the Code was also made by canvassing a scenario wherein, in the
event of liquidation operational creditors will receive no payments due to
their ranking lower in the ladder to other creditors, which would also include
other unsecured creditors who happen to be financial creditors. This challenge
was also negated by the Supreme Court, in as much as it was explained that
repayment of financial debts is essential to infuse capital in the economy
which can be further put to use. This was said to have created intelligible
differentia between financial debts and operational debts. It was further
clarified that unsecured debts are of various kinds and if some legitimate
interest is sought to be protected having relation to the object sought to be
achieved by the statute in question then it would not fall foul of Article 14.
Having adjudicated all of the aforementioned challenges and after giving
appropriate direction, the Supreme Court has approved of the Code in toto as a
positive and necessary step towards not only a better mechanism to govern the
field of insolvency law but also as an important step towards infusing capital
in the economy. Concrete figures have been quoted to make a case for a
quantifiable and proven positive result since the enactment of the Code. The
Government’s active approach in tweaking the Code as and when required was also
lauded by the Supreme Court.
_ _ _ _ _ _ _ _ _ _ _ _ _
_ _ _
GOVERNMENT ASKED BANKS TO SAVE JET AIRWAYS, AVOID BANKRUPTCY:
SOURCES
India's government has
asked state-run banks to rescue privately held Jet Airways without pushing it
into bankruptcy, as Prime Minister Narendra Modi seeks to avert thousands of
job losses weeks before a general election, two people within the
administration told. The finance ministry has in the past year sought regular
updates from the banks, led by State Bank of India (SBI), on Jet's financial
health, the people said. In recent months, the banks have provided weekly
updates about a revival plan and also sought government advice, the people
added. Top officials at the finance ministry seek regular updates on the issue,
said an official at one of Jet's lenders, who did not want to be identified as
discussions are private. Details of the discussion between the finance ministry
and bankers on bailing out Jet have not been previously reported. New Delhi has
urged state-run banks to convert debt into equity and take a stake in Jet in a
rare move in India to use taxpayer money to save a struggling private-sector
company from bankruptcy. The two people plus one more source, however, said
this would be transitory and lenders could sell the stakes once Jet revives.
The government has also nudged its 49 percent-owned National Investment and
Infrastructure Fund (NIIF) - created to invest in stalled and new
infrastructure projects - to buy a stake in Jet, a separate government source
said. It is crucial for India that Jet revives as the fall of its
second-largest airline could have disastrous consequences for the investment
climate in the sector, a top government official told Reuters. Putting what is
essentially a services provider like Jet through the bankruptcy process would
diminish its value because it owns no major assets, unlike a manufacturing
company, as most of its planes are leased, said another government official. If
it is pushed into bankruptcy and lessors start pulling even more planes out of
service, there would be nothing left for any potential investors, the official
said. Already 41 planes have been grounded by lessors in the past three months,
leading to flight cancellations. New Delhi is also backing a proposal for Jet's
founder and Chairman Naresh Goyal to step down if it means saving the airline,
another official said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
IL&FS SAGA: ED NOT CONVINCED WITH FINDINGS OF GRANT
THORNTON REPORT
The Enforcement
Directorate (ED) is unhappy with the Grant Thornton interim report on IL&FS
Financial Services, as the audit firm has been able to find money trail for
anomalies worth only Rs 2,364 crore while the report had pointed out financial
irregularities totalling Rs 13,000 crore. IL&FS has a debt of about Rs
89,000 crore, of which Rs 65,000 crore has been classified under the 'amber'
and 'red' categories The ED received Grant Thornton's report about a week after
it submitted the report to the IL&FS board on February 20. According to the
ED, the audit report only sheds light on some transactions but an in-depth
forensic report is missing. A source close to the development told The forensic
report did not go into details of layering in loan disbursement to companies,
that do not have proper collateral. As per our primary investigation, the first
layer of loan disbursement had no issue with respect to the prevention of money
laundering (PMLA). Their annual books have mentioned related party transactions
with details on relatives who have received contracts. The main investigation
point is about who received contracts in the second or third layers and whether
those companies actually exist or are just on paper. These critical details are
not a part of the (Grant Thornton) forensic audit report. Another source said,
Grant Thornton was under investigation from the Serious Fraud Investigation
Office in the Kingfisher Airlines case where the auditor had given a report on
the brand equity of Kingfisher, based on which Kingfisher took a loan from IDBI
bank. Enforcement Directorate feels this case may be the biggest scam of the
financial crime and could be worth more than Rs 30,000 crores Even the Ministry
of Corporate Affairs feels over Rs 30,000 crores may not be returned to banks
and over Rs 50,000 crores lie in the red category which means no kind of debt
will be serviceable. The ED is investigating instances where funds lent to
borrowers of IFIN, were utilised to provide funds to certain group companies of
IL&FS (primarily ITNL). Based on the unapproved minutes of the IL&FS
board meeting held on September 11, 2018, it appears that the then Board of
Directors and certain members of the board who were part of the Committee of
Directors were allegedly aware that the loans provided to third parties had been
forwarded or lent to IL&FS group companies. As per the forensic audit,
Certain companies of IL&FS Group (that were available) were identified
following instances amounting to Rs 2,270 crores where they received funds from
the third party to whom IFIN has lent loans. The Grant Thornton audit claimed,
ITNL received Rs 1,150 crore, Srinagar Sonmarg Tunnelway got Rs 390 crores,
Gujarat Integrated Maritime Complex received Rs 250 crores, Fagne- Songard
Expressway received loans of Rs 200 crore, Chennai-Nashri Tunnel Way received
Rs 150 crore, Sea Land Port and Sitar Bikaner got loans of worth Rs 100 crore
and Rs 30 crore, respectively. SREI, Empower, Vistar, GHV, PCL, Sangam and
Dynamatic had allegedly transferred the loan to these companies. The ED is
investigating at least six instances where nearly Rs 100 crore in loans
disbursed to borrowers were transferred to their promoters or directors.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
STAGE SET FOR ASSET SALE UNDER IBC
Having completed the
payment obligations to Ericsson, Reliance Communications is likely to move the
National Company Law Appellate Tribunal (NCLAT) in the next few days seeking
resurrection of its insolvency case in the lower court RCom will now seek
resurrecting its case in the National Company Law Tribunal (NCLT) as per its
announcement made on February 1, sources close to the development told. Last
week, the appellate tribunal while passing an order declining RCom’s appeal to
direct State Bank of India to release funds from the Trust and Retention account
for payment of Ericsson’s dues, had indicated it would pass a judgement on this
matter only after the settlement of Ericsson case. On the termination of their
asset-sale agreement by RCom and RJio, as per the clause of Insolvency and
Bankruptcy Code (IBC), now fresh bids can only be called by the Interim
Resolution Professional, sources said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
RBI OFFICIALS MEET BANKERS, SEEK FEEDBACK ON NEW LIQUIDITY
TOOL
Senior officials from the
Reserve Bank of India met about two dozen bankers on Monday for feedback on the
central bank's new cash infusion tool according to two bankers who attended the
meeting. While the meeting was aimed at ironing out any procedural issues for
implementing the central bank's debut move, it also indicated the RBI's
willingness to smoothen tight cash conditions in the banking system, the
bankers said. The RBI will conduct a forward dollar/rupee buy-sell swap auction
worth $5 billion on March 26, its first such move to infuse rupee liquidity
into cash-strapped banks. Under this arrangement, the RBI will buy dollars from
banks for three years promising a specified premium for selling back the same
at maturity. The announcement has already pushed down the one-year forward
premium by 30 basis points to to 3.60 per cent. They wanted to understand if we
had any suggestions or issues with the implementation of the auction because it
is a first for them as well, said one of the bankers. They also didn't say no
to suggestions of conducting such auctions going ahead as well. They said 'we
will see', the banker added. The central bank officials also reiterated that
the swap auction was purely to infuse liquidity and not aimed at the forex
market the bankers said. The RBI did not have an immediate response to an email
seeking comments on the meeting. There were some speculations that the RBI had
timed the move to also absorb potential bunched-up forex inflows at March-end. Bankers
also suggested lowering the tenure of the swap to below three years as well as
reducing the minimum bid size, which is $25 million currently. While the
central bank officials did not promise anything, they said they would like to
assess response to the first auction before making any changes, the bankers
said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SEBI ASKS MALVINDER AND SHIVINDER SINGH NOT TO DISPOSE ASSETS
Markets regulator
Securities and Exchange Board of India (Sebi) has ordered Malvinder and
Shivinder Singh not to dispose assets according to a report. Sebi’s order to
Singh brothers was in Fortis fund diversion case, the report added. The market
regulator also ordered Religare Enterprises’ arm Religare Finvest not to
dispose assets. The regulator also ordered Malvinder Singh and Shivinder Singh
to disassociate themselves from affairs of REL and its unit RFL in any manner
until further directions.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SEBI SLAPS RS 43.5-LAKH FINE ON 5 ENTITIES FOR NON-GENUINE
TRADES IN BSE STOCK OPTIONS
Markets regulator Sebi
Tuesday imposed a total fine of Rs 43.5 lakh on five entities involved in
reversal of trades in the illiquid stock options segment on the BSE. Sebi
conducted an investigation between April 2014 and September 2015 and found that
81.38 per cent of all the trades executed in stock options of the exchange were
non-genuine and led to the creation of artificial volume. The five entities are
among those that executed reversal of trades by reversing their buy or sell
positions in a contract with the same counter party during the same day, Sebi
noted. The trading behaviour of the noticee confirms that such trades were not
normal and wide variation in prices of the trades in the same contract in a
short time without any basis for such wide variation, all indicate that the
trades executed by the noticee were not genuine trades, Sebi said in similarly
worded separate orders. The trades being non-genuine, created an appearance of
artificial trading volumes in respective contracts, it added. Consequently, the
Securities and Exchange Board of India (Sebi) has levied a fine of Rs 17 lakh
on Vimal Vadilal Shah, Rs 11.5 lakh on Bhikshu Portfolio and Rs 5 lakh each on
RPC Commercial, Bhaijee Portfolio and Thakkar Kanaiyalal Shivram Bhai.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
SEBI PUSHES MKTS’ CLEARINGCORPS TO GET BOE APPROVAL
The threat of
Brexit-related business disruptions is almost here at Mumbai’s financial hub. Markets
regulator Sebi has asked clearing corporations (CCs) of the two leading
exchanges NSE and BSE to get them approved by the Bank of England (BoE) to
continue to do business with all UK-based entities, mainly foreign funds.
Currently in India, only one stock and commodities clearing corporation —
Metropolitan Clearing Corp (MCCIL) — is recognised by the BoE. Clearing Corp of
India (CCIL) also has the same approval, but it clears trades in government
bonds, corporate bonds and foreign exchanges only. CCs are usually subsidiaries
of exchanges but also independent entities After stocks, commodities, foreign
exchanges, etc are traded on the bourses, CCs get money from the buyer, take
delivery of the traded assets from the seller and then exchange the money and
the asset between the two parties. They also guarantee all trades done on the
bourses. CCs earn fees for both these ‘settlement’ services. According to
Sebi’s FY18 annual report, there were 506 foreign portfolio investors (FPIs)
from the UK with combined assets worth Rs 1.6 lakh crore in Indian stocks and
debt. With the Sebi-mandated inter-operability of CCs slotted to start on June
1 this year, there is every possibility MCCIL may already have a head start in
this lucrative business segment within the overall stock and commodities
trading areas, market players said. The implication of this development is
this: If Brexit happens, the CCs of BSE and NSE will not be allowed to settle
stock market trades for UK-based FPIs and also for those UK-based entities that
are allowed in the commodities derivatives segment, till these two entities get
themselves recognised by the BoE. However, top officials from BSE and NSE’s
clearing arms said that they are in talks with officials at the BoE and also at
the UK High Commission in India for the required registration. At present,
trades by all European FPIs and other entities are settled through either of
the three CCs — NSE Clearing, BSE’s Indian Clearing Corp and MCCIL, all of
which are recognised by European Securities and Market Authority (ESMA) through
Sebi. Once Brexit happens, only the recognised CCs will be able to clear trades
for UK FPIs and other entities. In such a situation, once an inter-operability
is in place that mandates trade settlement across exchanges and CCs, only MCCIL
— with its BoE registration — will be able to clear those trades. An NSE source
said that it was just a matter of time that NSE’s clearing arm was recognised
by the BoE and, even if Brexit happens, there is unlikely to have any impact on
CCs’ business in the short term. Sebi is aware of the issue and it is also
pursuing CCs to get approval from the BoE, an official said. BSE, on its part,
said, ICCL is in the process of applying for recognition to the BoE.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CPSE ETF NEW TRANCHE AIMS TO RAISE ₹3,500 CRORE
Government's last ditch
efforts to somehow get closer to the ₹80,000 crore disinvestment
target in the current fiscal will see the fresh CPSE Exchange Traded Fund (ETF)
opening for subscription on Tuesday to raise at least ₹3,500
crore. The fourth Further Fund Offer (FFO) will be open from March 19-22. Manager
of the FFO, Reliance Mutual Fund said the fifth tranche would open for
subscription on March 19, for anchor investors and non-anchor investors,
including retail investors, who can put in their bids from March 20-22. This
would be the second CPSE (Central Public Sector Enterprises) ETF FFO in the
current fiscal after a record ₹17,000 crore raised in November 2018. So far, the government
has raised a total of ₹28,500 crore through CPSE ETF, including the first offer in
March 2014 that mopped up ₹3,000 crore. The government and Reliance MF expect the CPSE
ETF to trade at very attractive valuations. As on February 28, the dividend
yield of the index was as high as 5.52 per cent, compared to 1.25 per cent for
the Nifty 50, says the MF. Through the latest offer, the government aims to
raise an initial amount of ₹3,500 crore and the offer size could be raised, as per
Reliance MF. The government has raised ₹56,473.32 crore through
disinvestment till February 28, as against the target of ₹80,000
crore for the 2018-19 fiscal.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
WITHDRAW 'AUTOMATIC EXTENSION OF PERIOD CLAUSE' IN ANNUAL
POLICIES: IRDAI
The insurance regulator
has directed the general insurers to withdraw the automatic extension in period
clause which is offered as an add-on with annual policy covers by general
insurers as this violates the rules of All India Fire Tariff and is
non-compliant with the guidelines on product filing procedures for general
insurance products. Insurance Regulatory and Development Authority of India
(Irdai) has observed that some insurers are offering ‘Automatic Extension of
Period Clause’ as an add-on to annual policies such as Standard Fire Special
Perils, Industrial All Risks, Office Package, Home Package, Shop Package. The
regulator, however, has allowed the existing policies to remain in force which
have been issued under the same clause until their expiry. An automatic
extension period clause allows the policyholders to extend the base policy
cover by a specified period and the insurer charges a pro-rata premium (premium
taken only for the period that the policyholder is looking to extend its cover)
for that extended period. But the terms, conditions and exclusions for an
add-on cover is same as the base cover. According to Irdai, a base annual
policy provides coverage for 365 days and general insurance products that have
a coverage period of more than a year are specified as long term products. Industry
experts believe the concern is that if insurers offer extension to the annual
policies then it will be treated as long term products but what has been
approved by the regulator is an annual policy.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
INDIAN OVERSEAS BANK EYES TURNAROUND IN SEPTEMBER QUARTER OF
2019-20
Indian Overseas Bank (IOB)
has said it will turn around by reporting profits from the second quarter of
the 2019-20 financial year. The announcement comes against the backdrop of an
increased number of branches reporting profit a drop in new slippages and a
good pace of non-performing asset (NPA) recoveries, among other factors. R
Subramaniakumar, who is spearheading the transformation, said that he was
confident of the bank exiting from the Reserve Bank of India’s (RBI's) Prompt
Corrective Action (PCA) framework and reporting profit by the second quarter of
FY20. He noted that the bank's operating profit stood at Rs 1,466 crore for the
December quarter of 2018-19, against Rs 685 crore in the same quarter the
previous year, showing growth of 114.11 per cent. Operating profit for the
first nine months of 2018-19 stood at Rs 3,902 crore, a growth rate of 56.10
per cent year-on-year. Operating profit has improved without much expansion in
topline growth. The bank’s net loss stood at Rs 346 crore for Q3 of 2018-19,
against a loss of Rs 971 crore during the December quarter of 2017-18, a
reduction of 64 per cent. One of the key reasons for the fall in loss is
profitability is performace at unit-level branches. The number of loss-making
branches, at 184 (or 5.6 per cent of total 3,284 braches) as on March 16, 2019,
is down from 718, or 21.1 per cent of 3,397 branches as on December 31, 2018.
IOB's cost-to-income ratio stood lower at 42.05 per cent and 44.95 per cent for
Q3 of 2018-19 and 9 months of the financial year, respectively. Its other
income grew by 41.91 per cent for Q3 of 2018-19 over the same quarter the
previous year and it saw a growth rate of 19.18 per cent for the first nine
months of 2018-19 compared with the same period the previous year. Fresh credit
disbursement of the bank is to the extent of recovery of Rs 10,660 crore. As
such, the bank is able to maintain its interest income, said Kumar, adding that
risk-weight assets to advances stood at 83.06 per cent and credit-risk-weight
assets to advances ends at 64.26 per cent. The bank is hopeful that it could
bring down its NPAs to Rs 24,000 crore in the next six months from Rs 35,000
crore at present. Around 72 per cent of the NPA is under the corporate sector,
of which recovery is expected from six to seven accounts under the National
Company Law Tribunal resolution to the extent of Rs 2,500-3,000 crore. IOB also
approved settlements worth Rs 2,700 crore to accounts. On the other side, the
bank has started controlling fresh slippages, which was around Rs 1,000 crore,
against Rs 1,500-2,000 crore earlier. In the past two months alone, the bank
has managed to do a cash recovery of Rs 1,000 crore.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
CORPORATE BATTLE LOOMS AS MINDTREE MANAGEMENT REJECTS
L&T'S TAKEOVER BID
A day after engineering
major Larsen & Toubro (L&T) made a hostile bid to take a controlling
stake in Mindtree, the managements of both the companies went all out to
convince shareholders of their respective stands. While the management of
L&T in a hurriedly convened press conference on Tuesday highlighted the
synergy of Mindtree with its IT portfolio companies, sounding a conciliatory
tone the promoters of the Bengaluru-based company were in no mood to relent and
vowed to fight till finish They said Mindtree under the current management was
well-run and had given maximum returns to the shareholders since going public
in 2007. The company now is best placed to protect the interests of the
stakeholders, including investors, employees and, most importantly,
Krishnakumar Natarajan said. L&T late on Monday mounted a hostile takeover
bid for Mindtree with a multipronged strategy to buy around 67 per cent in the
IT services firm for about Rs 10,733 crore. While it has entered into an
agreement with Mindtree's single-largest investor, V G Siddhartha, to purchase
his entire 20.32 per cent stake for Rs 3,269 crore, it is also eyeing an
additional 46 per cent through market purchase and an open offer. We are reaching
out to the fathers and mothers of the Indian IT industry to garner support as
this move will be taken as a bad precedent for the whole IT sector and also for
startup entrepreneurs who aspire to build large institutions, said Subroto
Bagchi. Even though Mindtree did not spell out its next course of action, it is
learnt the company is evaluating making a counter offer with the backing of a
friendly investor A decision to this effect is learnt to be on the agenda of
the board, which is meeting on Wednesday. We keep businesses as independent and
focused verticals with their own objectives. We are not planning integration,
but I cannot say what will happen in the future. Things keep changing with
time, said Subrahmanyan.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
WHISTLEBLOWER'S LETTER ALLEGES EVERGREENING OF LOANS BY SREI;
COMPANY REFUTES CHARGES
Kolkata-based SREI
Equipment Finance Limited has come under the scanner of various agencies after
a whistleblower's letter alleged that the financing firm had restructured loans
to prevent them from becoming non-performing assets (NPAs). Company regularly
restructured bad loans to escape NPA/launder money through the hawala route.
RBI guidelines are systematically bypassed said the letter. The GST department,
sources told had separately called SREI's Chief Executive Officer DK Vyas for
questioning, following raids in the company’s Mumbai office for alleged GST
violation. A senior officer in GST department added that the agency is
examining loans that SREI had given to infrastructure and real estate
companies. The loans were given on the basis of sale deeds between
inter-company transfers. As of now, we have not received any invoice generation
receipt. SREI said: It has come to our notice that an individual pretending to
be a whistleblower is spreading rumours and misinformation about Srei Group
anonymously. The claims made in the unsigned letter, which is being circulated
anonymously, are false and baseless. We believe that this is being done to
malign SREI Group's impeccable reputation and is a feeble attempt to blackmail
and extort money. One intra-company sales deed of Rs 22.5 crore between
Mumbai-based real estate firm Nirmal Lifestyle and its unit Nirmal Lifestyle
Kalyan Private Limited, where - as the whistleblower letter had alleged – the
loan seemed to have been ‘restructured.’ According to the sales deed papers,
Nirmal Lifestyle got a loan of Rs 22.5 crore from SREI Equipment to buy
construction equipment from its unit on March 16, 2018. But within 12 days of
getting the loan, Nirmal Lifestyle repaid loans worth Rs 22.5 crore, which many
of its units, including Nirmal Lifestyle Kalyan, owed SREI Equipment. This
despite the authorization letter mentioning that the money sanctioned can’t be
used in re-payment of loan. Both, SREI and Nirmal Lifestyle Limited, have
refuted the charges. We have taken this loan from SREI against various
assets/properties/Land owned by Nirmal Group and the said loan of Rs. 22.5 Cr
has been availed by Nirmal Lifestyle against the assets owned by Nirmal
Lifestyle only, said Nirmal Lifestyle, in response to query. We would like to
deny that Rs 22.50 cr was financed by us to Nirmal Lifestyle to buy
construction equipment from its subsidiary Nirmal Lifestyle Kalyan. We have all
the necessary documents corroborating these facts. Further the security charge
created in our favour can be verified in CERSAI and with ROC.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
WE ARE NOT CORPORATE RAIDERS, SAYS L&T CEO
Facing promoter opposition
in its bid to buy Mindtree, Larsen & Toubro (L&T) defended its
acquisition saying it is not a corporate raider but a professionally run
entrepreneurial company seeking to work with another like-minded entity to
realise bigger aspirations in technology services. It shouldn’t be seen as a hostile
takeover, S N Subrahmanyan told. We didn’t go looking for Mindtree. Its largest
shareholder, V G Siddhartha, approached us with a deal after he tried engaging
with the founders regarding his exit. Being a founder-investor, he was
emotional about to whom he would sell the stake, he said. He (Siddhartha)
wanted to sell his shares to a company that has values similar to Mindtree,
said Subrahmanyan, adding that, L&T is the best home for Mindtree in the
country. L&T provides Mindtree protection from any other hostile takeover. Coffee
Day founder Siddhartha sold his entire 20.32% stake in Mindtree to L&T for
Rs 3,269 crore on Monday. L&T has placed orders with brokers to pick up
another 15% from the open market, followed by an open offer for an additional 31%.
If successful, L&T will have a 66.32% stake in Mindtree for nearly Rs
11,000 crore, or $1.6 billion. The 57-year-old L&T chief said there was no
intention to merge the Bengaluru-headquartered Mindtree with its technology
services business. We would provide board oversight, customer connections,
network and balance sheet, which Mindtree can leverage while bidding for large
contracts, Subrahmanyan said, who is also called SNS. If combined, the
conglomerate’s IT services businesses (L&T Infotech and L&T Technology
Services) and Mindtree could move up to the sixth slot in terms of revenues
totalling $3 billion among Indian software services companies, from the eighth
position. Interestingly, six years ago, Mindtree promoters had approached
L&T with a takeover proposal but L&T had other priorities then. At that
time, Siddhartha wasn’t keen on selling his stake in Mindtree. Subrahmanyan
said that there are no plans to disturb the existing management of Mindtree and
that the promoters could continue with the company. Krishnakumar (Natarajan —
one of the Mindtree promoters) is a personal friend. He had also come for my
son’s wedding last week and we spoke this morning as well… We will continue to
have a dialogue with the Mindtree management, Subrahmanyan said, emphasising
that there was a certain inevitability about L&T’s presence in Mindtree
now. The L&T management said that it would like to have at least 26% in
Mindtree in the immediate future and, going forward, it would like to hold 51%
in the IT services company. A 26% stake will allow L&T to block special
resolutions and a 51% will give L&T the right to exercise majority control
over Mindtree and change the complete board of the company. The transaction
requires approvals from the Competition Commission of India and anti-trust
regulators in certain foreign jurisdictions, which are expected to come in the
next 45 days, said R Shankar Raman. Raman said that L&T cannot buy or trade
in Mindtree shares until the transaction receives necessary approvals. We don’t
know what the response will be for the open offer market dynamics will play
out. Subrahmanyan said L&T had approached the transaction from its dil and
laced it with lots of pyaar (love). While its pyaar for Mindtree is one-sided
like it is seen in several Hindi movies, it could turn mutual eventually, like
it happens in movies and then we will live happily ever after, he quipped.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
VODA IDEA BOARD OKAYS RS 25,000 CRORE RIGHTS ISSUE
The board of India’s
largest telecom operator Vodafone Idea approved raising of up to Rs 25,000
crore through rights issue the company said on Wednesday. The issue price is
set at Rs 12.50 per equity share, a Rs 2.50 premium over face value of Rs 10.
Following the development, the stock took a beating. It was quoting 5.31 per
cent lower at Rs 30.30 around 12:30 pm. The issue will run between April 10 to
April 24. The record date for the purpose of determining the shareholders who
will be eligible to apply for the issue is April 2.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
BOFA IS SAID TO PURCHASE JAYASWAL NECO, ITS BIGGEST DISTRESSED
ASSET BUY IN INDIA
Bank of America Corp. has
bought its biggest distressed asset in India, adding to a growing trend of
foreign investors diving deeper into the country’s massive pile of bad debt. A
group of investors led by the U.S. bank have paid Rs 3,300 crore ($479 million)
for soured loans of a beleaguered Indian maker of cast iron pipes, according to
people familiar with the matter. The group, which includes local bad debt buyer
Assets Care & Reconstruction Enterprise, bought distressed loans of
Jayaswal Neco Industries Ltd., with a face value of Rs 4,700 crore, said the
people, asking not to be identified as they aren’t authorized to speak
publicly. Lenders led by State Bank of India sold the debt, taking a haircut of
30 per cent on the all-cash deal, the people said. As India battles with the
worst non-performing loan ratio among the world’s major economies foreign
investors are vying for a piece of the $190 billion pile of soured and stressed
debt. Steelmakers have struggled to repay debt in recent years, with Essar
Steel India Ltd. among one of the most high-profile cases. Jayaswal Neco became
stressed as a slump in demand for its products eroded its debt repayment capability.
Bank of America has been upping the ante on its investments in India. Its
purchases of distressed loans in India include those of telecom tower firm GTL
Infrastructure Ltd. and SevenHills Hospital. It was also the sole bidder for
State Bank of India’s $2.2 billion Essar Steel loan, which was scrapped.
Foreign investors that have been active in India include Deutsche Bank AG,
which is setting up a unit in India to buy and reorganize soured debt. Other
overseas investors including Blackstone Group LP and SSG Capital Management
Ltd. have bought into existing asset reconstruction companies. More than 29
asset reconstruction companies have been set up in India under a 2002 law,
passed to help lenders reorganize non-performing assets, RBI data show.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
EXTERNAL BENCHMARK LINKED LOAN TO SAVE RS 12,500 CR IN
INTEREST COSTS
Using external benchmarks
to price loans will increase the susceptibility of the corporates’ credit to
the changes in rates emanating from monetary policy actions. In the current
downward interest rate cycle, the shift to repo rate based external benchmark
could bring savings worth Rs 12,500 crore in interest expense to the Indian
corporates in FY20, according to India Ratings. However, in an upward interest rate
cycle, the contraction in the interest cover could also be equally dramatic In
the new paradigm of external benchmark driven rates, the transmission is likely
to become more direct and therefore increase the market risk exposure of the
Indian corporates. This is likely to necessitate corporates to put in place
active treasury management practices to better manage their interest rate
risks, it added. The sectors such as construction, gems & jewellery,
textile, chemicals and real estate, which are inherently working capital
intensive, are likely to be more affected and profits could therefore be linked
more closely to market and/or policy rates. But there are some sectors which
are working capital intensive sectors yet may not be more vulnerable as borrowings
are dollarized and hence are already liked to international benchmark. These
sectors are oil and gas, and pharmaceutical with a large proportion of working
capital borrowings. At present only State Bank of India has announced shift in
business practice and other banks are expected to follow the suit, although the
external benchmark could vary. The landed price for advances will be a function
of the combination of interest rate as well as the processing fee, while the
liability (deposits) pricing will mostly be linear. Consequently, in a falling
interest rate scenario, short-term money market instruments will be relatively
attractive for depositor than bank deposits with access to financial markets.
This substitution effect could catalyse a drain on urban deposits during the
falling interest rate regime.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
MINDTREE TO BE RUN INDEPENDENTLY FOR NOW, SAYS L&T
Engineering major Larsen
& Toubro (L&T), which mounted a hostile takeover of software firm
Mindtree with a ₹10,733-crore bid on Monday, ruled out merging it with its IT
arm for the time being. L&T on Monday announced a hostile takeover bid
involving a three-pronged acquisition of Mindtree, wherein it will pay ₹980
a share for a 20.3% stake of V.G. Siddharth, buying 15% from the public and
mounting an open offer at ₹980 a share later. Thus, it plans to acquire 67% for a
consideration of ₹10,733 crore. We have not thought about integrating Mindtree
with us (L&T Infotech). For the time being, it will be run as an
independent entity, L&T managing director and chief executive S.N.
Subrahmanyan said on Tuesday. Describing the deal as a meeting of two
like-minded people, Subrahmanyan said V.G. Siddharth, whose 20.3% stake the
company bought out at ₹980 a share, had approached them three months back for buying
him out. It was a meeting of minds between us and Siddharth, Subrahmanyan said,
adding, the Cafe Coffee Day owner wanted to house his shareholding with a group
where he saw the same governance values and ethics. The senior management at
Mindtree are good friends with us and are people of repute and we see a lot of
positivity in going ahead with the deal, he said. He also reassured employees
that L&T is a 80-year-old company with strong governance values. Mindtree
will be run as an independent company, L&T will provide board oversight. We
hope better sense and rationality will prevail, Subrahmanyan said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
POWER FINANCE CORPORATION’S EGM PASSES RESOLUTION FOR REC
TAKEOVER
The extra ordinary general
meeting (EGM) of the members of state owned Power Finance Corporation Ltd (PFC)
on Tuesday cleared the decks for the power sector lender to buy the Union
government’s entire stake and acquire management control in REC Ltd (formerly
Rural Electrification Corp.). The EGM held at Gurgaon passed a resolution for
PFC to enter into a Related Party Transaction (RPT) for acquiring GoI's
1,03,93,99,343 fully paid up equity shares of REC Limited together with
management control. The government is likely to net around Rs14,000 crore in
its disinvestment kitty with the Cabinet Committee on Economic Affairs (CCEA)
in December approving the sale of the government’s stake in REC to PFC, along
with management control. Given that PFC is under the administrative control of
the power ministry, it makes the Government of India and PFC related parties,
according to the Companies Act. The Act states that no company shall enter into
any contract or arrangement with a related party without the board’s approval. The
transaction will now have to be approved by the boards of the two public sector
units and minority shareholders. The PFC board meeting is expected later in the
day with the decision being termed as ‘procedural.’ The resolution has been
passed by the EGM. It was procedural and a necessary formality before the board
meeting. The share price and other details will be decided by the PFC board,
said a senior company executive requesting anonymity. The decision also signals
the creation of a major lending institution for the Indian power sector and is
expected to reduce competition, while leveraging synergies and achieving
economies of scale, as REC and PFC are the biggest lenders in that space.
According to Moody’s Investors Service, PFC and REC had total reported assets
of ₹2.86 trillion and ₹2.46 trillion
respectively. The EGM has passed the resolution.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
FORTIS HEALTHCARE APPOINTS ASHUTOSH RAGHUVANSHI AS MD AND CEO
Fortis Healthcare Tuesday
said it has appointed Ashutosh Raghuvanshi as Managing Director and Chief
Executive Officer of the company with immediate effect. The company's board of
directors have approved the appointment of Raghuvanshi as MD and CEO with
immediate effect for a period of three years, Fortis Healthcare said in a filing
to the BSE. This is subject to the approval of shareholders of the company, it
added.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
ASIA'S RICHEST MAN MAY REAP REWARDS FROM BROTHER'S TELECOM
WOES
Asia’s richest man Mukesh
Ambani’s decision to end a deal with his brother -- even as he bailed him out
-- may be an astute business move. While helping keep his sibling out of prison
this week, Ambani also ditched an accord to buy the assets of his brother’s
beleaguered telecom carrier Reliance Communications Ltd., effectively nudging
it toward bankruptcy. With RCom all but sure to head into insolvency
proceedings, Ambani may be able to snag those same assets at a discount. In a
last-minute rescue Monday, Mukesh stepped in to help younger brother Anil pay
$80 million in dues to a local unit of Ericsson AB and avert a three-month jail
sentence. On the same day, his Reliance Jio Infocomm Ltd. and Anil’s RCom
terminated a 2017 deal that had helped the latter stave off bankruptcy. With
that deal now off, RCom is likely to go into a court-led process that may
provide Mukesh’s Jio another shot at buying up the carrier’s airwaves, towers
and fiber What’s more, he may get them for less than the 173 billion rupees
($2.5 billion) Jio agreed to pay a year ago given the weak financial health of
India’s other telecom operators. Jio may have scrapped the asset purchase deal
with RCom, but it cannot be ruled out that Jio will try and participate in the
purchase, under the bankruptcy process, said Saurav Kumar, a New Delhi-based
partner at IndusLaw, an Indian law firm. That may eventually be cheaper for
Jio. A lower price for RCom’s assets would mean deeper haircuts for lenders
trying to recover some of the $7 billion in debt the unprofitable operator had
as of March 2018. India’s bleeding telecom sector will probably keep auction
prices low, allowing Jio to spend less on acquiring RCom’s spectrum, Kunal
Agrawal, a Bloomberg Intelligence analyst said in a March 19 note.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
VARIABLE COMPONENTS IN CXO SALARY ON THE RISE
Companies in India are
going all out to lure high-potential executives with generous
performance-linked payouts as a talent crunch at the top is prompting many of
them to remove the ceiling on variable pay. Human resource heads and executive
search experts said variable pay is increasingly becoming a game changer in CXO
compensation, rising up to 200% of the commitment in cases of exceptional
performance. Called stretch variable in industry parlance, a higher variable
pay, which is no longer restricted to a fixed percentage of the total
cost-to-company (CTC), incentivises excellence and also spells reduction in
fixed pay, said industry experts. If you cap variable pay, people don’t stretch
themselves and it puts a cap on performance for both the individual and the
company, said S Venkatesh, president, group HR at RPG Enterprises, which has
interests in tyres, infrastructure and IT. This used to be the philosophy for
sales people earlier. We have brought the same philosophy to the leadership
level, and one can now earn 180% of the variable pay at peak performance. R
Suresh, said an increasing number of companies are removing the cap on variable
pay as they are trying to structure senior management pay as per the required
output. As total compensation of the top management goes up, companies want to
introduce these clauses to make sure payout is for the performance delivered,
he said. The correlation of pay and performance has traditionally been low in
India, primarily because the established compensation structures had a high
fixed component and a low variable. However, this is changing now, leading to
high-risk and high-return opportunities for CEOs and senior management. You
cannot keep increasing fixed salaries, said Navnit Singh. A lot of CEOs and CXOs
are getting minimal fixed pay while the variable component is increasing –
partly linked to the individual and partly to the company performance. Besides,
as company sizes in India increase, CEO pay mix is changing in favour of higher
variable pay, with the performance-linked portion constituting 30-40% of the
total pay on average, according to an earlier survey by human resources
consulting firm Aon Hewitt. Industry estimates suggest that the variable
component in salary (both short-term and long-term incentives) in a few cases
could be as high as 55% of the pay mix, a significant shift from five years
ago. Companies are increasingly trying to find ways to look at compensation as
a driver of performance culture, said SV Nathan. In the past, organisations
sought to attract senior talent with employee stock ownership plan, but ESOP is
no longer a big draw and hence they are focusing on performance-linked variable
pay, said Nathan. Organisations are looking at how to make variable pay elastic
as giving big increases year-on-year in fixed pay does not make sense, he said.
Traditionally, IT and ITeS companies have been more aggressive with long term
incentives as they competed with global rivals for talent. However, companies
in other sectors such as manufacturing sector are now getting more aggressive
on variable pay, said compensation experts. Variable pay is a huge motivation
at the senior level for people who have to move the organisation engine, said
Prince Augustin, group HR director, Mahindra & Mahindra. We go up to 170%
of the variable pay. Suresh Bose, director at metals and mining conglomerate
Vedanta group, said the idea is to compensate for a job done. We are seeing
more potential leaders in this way who could be a future CXO, he said.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
INDIANS WILL LEARN NEW SKILL IF THEY GET 4-DAY WORK WEEK:
SURVEY
Learning a new skill or
hobby is top priority of 66 percent Indian professionals if they were to get a
four-day work week according to a recent survey. With 'more time' wish lists,
most Indian workers wished they had time to learn a new skill or hobby followed
by watching TV, movies or listening to music, according to Kronos Incorporated
survey 'Future of workplace' series. It's not surprising to see that the survey
reflects an aspiring young India seeking more opportunities to acquire a new
skill, unlearn or relearn if they find spare time or added time as a key get
away. It's rather intriguing to see that they might put off a family vacation
and instead put in those extra hours to acquire a new skill or a certification,
Kronos said. In their personal lives the top five things people worldwide wish
they could do more of are spend time with family (44 percent), travel (43
percent), exercise (33 percent), spend time with friends (30 percent) and
pursue their hobbies (29 percent). Employees in France, Germany, the US and the
UK listed 'sleep more' as a top priority, while in UK workers wished they had
time to learn a new skill or hobby. While people in Mexico would spend more
time watching TV, movies or listening to music and 'read more'. Boomers in
particular (51 percent) would like to travel more travel more, it added. Meanwhile,
the survey further revealed that India led the way as the hardest-working
country, with a whopping 69 percent of full-time employees saying they would
still work five days a week even if they had the option to work fewer days for
the same pay. While Mexico was the second-highest at 43 percent of workers
would work five day week on same pay followed by the US at 27 percent. The UK
(16 percent), France (17 percent) and Australia (19 percent) are the least
content with the standard five-day work week, it added.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
WHAT RISING H-1B VISA REJECTION MEANS FOR INDIAN IT COMPANIES
IN US
Rejection rates of H-1B
visas have been on the rise Data from the US Citizenship and Immigration
Services analysed by Nomura Financial Advisory and Securities (India) Pvt. Ltd
shows a 25% rejection rate of H-1B visa petitions during October-December 2018.
Even worse, the top-30 H-1B visa petitioners have seen a 37% initial-petition
rejection rate for the year ended September 2018. Renewal rejections have also
increased. For the lucky ones, the H-1B approvals are not coming easy. Visa
authorities have stepped up scrutiny, seeking more information about the
petitioner, termed as request for evidence. As many as 60% of H-1B petitions
have seen such scrutiny last quarter. Of them, 39% were rejected. To alleviate
the impact of H-1B visa rejections, Indian IT companies are stepping up US
hiring, but it is raising cost structures. We believe higher localisation will
make the IT cost structures less flexible in a downturn and, to minimise
utilisation risks, companies will do a mix and match between high-cost but
flexible sub-contractors and lower-cost own hires but with higher utilisation
risk, add analysts at Nomura.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
U.S. HUMAN RIGHTS REPORT FLAGS CURBS ON INDIAN MEDIA
The country Human Rights
reports for 2018 were released last week as part of an annual exercise in which
the U.S. State Department submits its assessment of such rights as per the
Universal Declaration of Human Rights and other international agreements to the
U.S. Congress. The 2018 India report covers a range of issues including press
and media freedoms, forced disappearances, custodial deaths and the NGO
clampdown — which became an issue between the U.S. and India, after the NDA
government cancelled licenses of some 15,000 NGOs under the Foreign Contributions
Regulation Act. In 2016, U.S. Secretary of State John Kerry had taken up the
issue of the Christian charity, Compassion International, with Minister for
External Affairs Sushma Swaraj. The government imposed restrictions on foreign
funding of some nongovernmental organizations (NGOs), including those with
views the government stated were not in the ‘national interest’, thereby
curtailing the work of these NGO, the report said. In terms of custodial
deaths, the Report cites official (Indian) figures of 1,674 cases of such death
between August 2017 and February 2018, with 1,530 occurring in judicial custody
and 144 in police custody. The report, in a separate section, Role of the
Police and Security Apparatus , says, Police continue to be underpaid, overworked,
and subject to political pressure, in some cases contributing to corruption. It
says 130-145 civilian deaths by security forces in Jammu & Kashmir occurred
between June 2016 and April 2018. The report however also adds that,
Non-governmental forces, including organized insurgents and terrorists,
committed numerous killings and bombings in the State of Jammu and Kashmir, the
northeastern States, and Maoist-affected areas. Taking note of undertrials, the
report, based on National Crime Record Bureau (NCRB) data, says just over
2,93,000 individuals were awaiting trial at the end of 2016. It also cites a
2017 Amnesty International report saying that Muslims, Dalits and Adivasis
comprised a disproportionate number (53%) of pre-trial detainees, Regarding press
freedom and the safety of journalists, the report says , There were numerous
instances of journalists and members of media being threatened or killed in
response to their reporting. Police rarely identified suspects involved in the
killing of journalists. It cites a 2017 Press Council of India report saying at
least 80 journalists were killed since 1990 but only one conviction had
occurred thus far. The report quotes the 2018 World Press Freedom Index as
saying online trolling and attacks on journalists was a major issue. The
government also made an increasing number of requests for data from internet
companies as per the report. 22,024 requests were made in 2017, according to
Facebook data, a 61.7% rise from 2016.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
DONALD TRUMP INTENDS TO DESIGNATE BRAZIL AS 'MAJOR NON-NATO
ALLY'
US President Donald Trump
has said that he intends to designate Brazil as a major non-NATO ally a move
aimed to cement America's ties with the Latin American country where China has
made deep strides in recent years. The move by Trump gains significance as
Brazil is a key member of the powerful five-nation BRICS grouping and has
joined hands with India, Japan, and Germany to become a permanent member of the
UN Security Council. BRICS stands for Brazil, Russia, India, China, and South
Africa. Trump made the announcement during a joint Rose Garden press conference
at the White House with visiting Brazilian President Jair Bolsonaro on Tuesday.
Trump welcomed Brazil's ongoing efforts regarding economic reforms, best
practices and a regulatory framework in line with the standards of the
Organization for Economic Cooperation and Development (OECD). He noted his
support for Brazil initiating the accession procedure to becoming a full member
of the OECD.
__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
IAF ASKS FOR FRESH AMMO AS PAKISTAN MOVES UP F16S, TAKES
TERROR CAMPS TO FATA
The Air Force has asked
the government to urgently purchase fresh ammunition for its fighters amid
continuing tensions after Pakistan brought all its F16s upfront on the Indian
border and moved terror camps out of IAF reach to the far west in the Federally
Administered Tribal Areas (FATA). These missiles have a certain life. While
stored in a canister, this is counted in terms of the age of the system in
years but when fighters are operationally deployed, the life of the missile
depends on the number of sorties being undertaken. So we need fresh
replenishments, top government sources explained. The ammunition required are
mainly air-to-air missiles that jets on patrol have been carrying to counter
the Pakistani air force. The F16s have been distributed all across Pakistani
airbases and are still trained at us. They are continuing to undertake night
flying and have their air defence network on alert, sources told, adding that
Indian jets too remain in position to deter any misadventure.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
No comments:
Post a Comment