Corporate Updates: CORPORATE UPDATES 26.03.2019

12,000 CASES FILED SINCE IMPLEMENTATION OF INSOLVENCY LAW, SETTING UP OF NCLT, SAYS OFFICIAL

As many as 12,000 cases have been filed since the implementation of the insolvency law and setting of National Company Law Tribunal (NCLT), a senior government official said Monday. Asserting that the Insolvency and Bankruptcy Code (IBC) should be the last resort, Corporate Affairs Secretary Injeti Srinivas said the NCLT has been very expeditious in disposing cases related to insolvency. In some of the NCLTs, the number of cases filed and the number of cases disposed off are almost the same. That means you are almost current, he noted. Cases under the code can be taken up only after approval from the tribunal, which has benches in different parts of the country. Srinivas said that personal insolvency should be approached carefully and in a planned manner. The issue of personal insolvency is an important dimension, which we have to address at the earliest. Today, we have approximately Rs 77 lakh crore as outstanding non-food credit Out of this, industry accounts for about Rs 26 lakh crore and the services sector accounts for about Rs 21 lakh crore. These two put together accounts for Rs 48 lakh crore. It is 70 per cent of non-food credit outstanding. We are left with 30 per cent which we need to address now, Srinivas said. According to him, there are two routes for personal insolvency -- one is insolvency process followed by bankruptcy process and the second one is a fresh start. A fresh start or a waiver or a waiver of a loan should be considered for debtors based on certain criteria such as income levels and assets, he said. (Around) 4,500 cases have been settled before resolution to a settlement amount of almost Rs 2 lakh crore. 1,500 cases have been admitted. 6,000 cases are waiting in queue, he added. The IBC provides for time-bound resolution of stressed assets. To a query on long time taken in resolving certain cases under the IBC, Srinivas observed that it would not be fair to say that cases have been lingering on. May be these large cases have taken more than 270 days and some may be double of that but if you look at the size of that loan and the quantum of recovery, it is still an extraordinary sort of result. In (the case of) Essar, more than Rs 42,000 crore would be (recovered). That is a very big sum and involves some many creditors. I think for such very large cases, there would be some amount of litigation and one year or little over one year for such a large case to be settled is not too long, he said. Further, he said the time taken for resolution of large cases is not too long, especially when it is compared with the average of four-and-a-half years which has been taking prior to the IBC. The repayment behaviour of poor persons is much better than the repayment behaviour of richer people because they know their livelihood would come to an end if they default, Srinivas said. Insolvency and Bankruptcy Board of India (IBBI) Chairman M S Sahoo said the challenge before the Committee of Creditors (CoC) is the ability to recognise and distinguish between a company, which is potentially viable and unviable, then design a feasible resolution plan, while ensuring the firm's value does not get further eroded in the process. The CoC should be willing to restructure its liability and delay liquidation if the company has the potential to be restored to health. However, the rescue plan should be confined only to viable companies, he said. Noting that cross-border insolvency is still work in progress Srinivas said that UNCITRAL provides for enough flexibility to have carve outs. It is under the consideration of the government and very soon Parliament might also approve it, he added. Established in 1966, UNCITRAL is a subsidiary body of the General Assembly of the UN with the general mandate to further the progressive harmonisation and unification of the law of international trade, as per its website. The UNCITRAL Model Law has been adopted in more than 40 countries. The model law deals with four major principles of cross-border insolvency, including direct access to foreign insolvency professionals and foreign creditors to participate in or commence domestic insolvency proceedings against a defaulting debtor. Srinivas said that having insolvency counsellor is a very good idea. We should look at it seriously. You should have an option for the counsellor to sort it out. Some mediation process should be there, he added.

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WORKMEN'S DUES OF PENSION, GRATUITY, PF NOT INCLUDED IN LIQUIDATION ESTATE ASSETS :NCLT

The New Delhi bench of National Company Law Tribunal has ruled that dues of provident fund, pension and gratuity do not form part of liquidation estate of corporate debtor and cannot be included in the assets to be liquidated for settling claims of creditors as per Section 53 of the Insolvency and Bankruptcy Code. The ruling was given in an application filed by workmen seeking release of their dues of PF, pension and gratuity from the waterfall mechanism - the scheme for distribution of proceeds from the liquidation of assets of the corporate debtor in the preferential order mentioned in Section 53 of the IBC. The Official Liquidator took the stand that dues of PF, pension and gratuity will not come under the ambit of workmen dues under Section 53. As per Explanation II to Section 53, workmen dues have the same meaning as assigned in Section 326 of the Companies Act 2013, which does not mention dues of PF, pension and gratuity, said the Liquidator. Banks Clueless About Recovery In this backdrop, the workmen approached the NCLT through Advocates Swarnendu Chatterjee, Dinkar Singh, Itisha Gulati and Pankaj Agarwal. The NCLT said that there was a basic flaw in the reasoning of the Official Liquidator It said that under Section 36(4) (a) (III), the expression 'liquidation estate' has been defined and it is clarified that all sums due to any workman or employee from the provident fund, pension fund and gratuity fund, were not included in the expression liquidation estate assets. Once the sum due to any workman or employee from the provident fund, pension fund and gratuity fund are not constitute a part of the liquidation estate, we fail to understand as to how Section 53 could be invoked along with its explanation. According to Section 53, the proceeds from the sale of the liquidation assets are to be distributed in the manner specified therein. Therefore, the aforesaid amount of the workmen dues cannot be a part of liquidation estate assets, said the Tribunal. The bench of President M M Kumar and Technical Member S K also made reference to a similar ruling by Mumbai bench. The Mumbai bench had ruled that since section 36(4)(iii) has excluded the PF dues of the workmen from the liquidation estate assets treating it as an asset of the workmen lying with the corporate debtor, Section 53 is not applicable to say that these dues fall within the ambit of liquidation estate. Based on this, the New Delhi bench observed that the liquidator has taken a perverse view by unnecessarily referring to explanation II of Section 53 and Section 326 of the Companies Act. The application was allowed and the Liquidator was directed to consider the claim of workmen afresh.

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WILL TAKE ALL STEPS TO PROTECT DOMESTIC INTERESTS IN CROSSBORDER INSOLVENCY REGIME: INJETI SRINIVAS, CORPORATE AFFAIRS SECRETARY

India will provide adequate carve-outs to protect domestic interests in the crossborder insolvency regime which is under consideration by the government, a senior government official said. Such provisions may mean that a portion of the debtor’s assets may be kept aside to pay domestic creditors, according to the Insolvency and Bankruptcy Code (IBC). One thing we can be sure is that we will have all carve-outs that are required to safeguard domestic interests. We can’t adopt internationalism at the cost of domestic interests, corporate affairs secretary Injeti Srinivas said. Srinivas said the law would initially only give jurisdictional access on the basis of reciprocity and that the reform would give foreign investors greater confidence. We will go step by step and look at reciprocity initially We need not open it up to every country; we will say every country which will reciprocate, we will only give them this facility, said Srinivas. While large insolvency cases have taken more than 270 days under IBC, the outcomes of such cases have been positive, Srinivas said. For such very large cases, there would be some amount of litigation and it (the time taken) is not too long, especially if you compare it with the average of four-and-a half years under the previous regime Srinivas said, adding that the size of the loans that were being resolved and the quantum of the recoveries constituted an extraordinary result. Srinivas said the IL&FS (Infrastructure Leasing and Financial Services) group entities that had been classified as red because of their inability to service debt obligations were not necessarily beyond revival Today almost 50% of the assets (of the IL&FS group) have been put on the block. I think in the coming 2-3 months we should be able to see 50% of the IL&FS portfolio being resolved, he said. Of the 169 domestic IL&FS group companies, 50 entities have been classified as ‘green’. Another 13 have been classified as ‘amber’ and 80 as ‘red’. The National Company Law Appellate Tribunal has directed all ‘green’ companies to service their debt obligations. However, ‘amber’ and ‘red’ companies continue to enjoy a moratorium on all claims against them, granted by the NCLAT in October 2018.

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RULES TO REVIVE COMPANIES BEFORE LIQUIDATION TO COME OUT SOON

The ministry of corporate affairs will soon notify regulations on last possible measures for revival of companies that have been ordered for liquidation through the insolvency process Once the liquidation order is given, the liquidator has to explore Section 230 of the Companies Act first. We are working on the regulation on how this will be done and the process that will be followed, a senior official aware of the developments said. This follows a recent order by the National Company Law Appellate Tribunal, in which it directed the liquidator to exhaust options available under this section before proceeding to attempt to sell the company wholly or in parts. Section 230 of the Act allows creditors to make arrangements with the members of the company to restructure debt liabilities. The official said compromise should be another option for exit before liquidation, with a view to reduce destruction of value. It is not clear if this would mean that promoters who are otherwise prevented from bidding for distressed assets under Section 29(A) of the Insolvency and Bankruptcy Code would be able to regain control of their companies if a liquidation order has been passed.

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SEBI BARS FPIS NOT MAKING DISCLOSURE

The Securities and Exchange Board of India (Sebi) has asked bourses to block the accounts of foreign portfolio investors (FPIs) that haven’t submitted the names of beneficial owners to custodians. Top investors based in the US and Europe such as Pacific Investment Management Co (Pimco), which manages assets worth $1.66 trillion globally, are said to be among those that hadn’t provided details by the March 20 deadline, said people with knowledge of the matter. Assets worth $5 billion have been blocked, they estimated. The FPIs have been barred from making fresh investments in Indian markets but will be allowed to sell their holdings, they said. The capital market regulator has asked custodians to share the list of non-compliant FPIs with stock exchanges and has asked brokers not to execute trades on their behalf. About 70 per cent of the FPIs have submitted BO (beneficial owners’) details and complied fully with the know-your-client (KYC) requirement. Around 20 per cent have submitted the details at the last minute, said one of the persons cited above. While 10 per cent have not complied, Sebi has collected the statistics from custodians and shared the list with stock exchanges. The ban has started already. The regulator had issued a circular on April 10 last year asking FPIs to identify the beneficial owner of a fund based on not just ownership but control as well. In cases where there was no significant beneficial owner based on economic ownership, fund managers and other senior management officials were to be listed as such. Mutual funds, for instance, have no significant beneficial owner since they raise money from subscribers. Stiff opposition from FPIs, especially non-resident Indians (NRIs), on this issue forced Sebi to ease the requirements. The regulator restricted the new interpretation of beneficial ownership to KYC requirements. For those FPIs based in high-risk jurisdictions, the threshold for beneficial ownership is 10 per cent. Failure to submit beneficial ownership details within six months could invalidate registration and force an FPI to sell its Indian holdings.

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NEW SINGLE BORROWER LIMIT FOR LARGE COMPANIES

Companies owned by business groups dependent on bank funding will have to adjust to new single borrower limits of the Reserve Bank of India (RBI) from April 1. These companies from large business houses like Reliance, Tata, Bajaj and Aditya Birla will have to increasingly look beyond banks to raise funds as the new rules stipulate that firms with more than Rs 10,000 crore loans raise at least 50 per cent of incremental money required from bond or equity markets. These guidelines are part of an attempt by the RBI to address the concentration risk of the banking system arising from its exposure towards a single counterparty. The RBI timeline for such reduction in risk started in fiscal 2017-18 when single party exposure was fixed at Rs 25,000 crore. Subsequently this was reduced to Rs 15,000 crore in 2018-19 and is set to be further reduced to Rs 10,000 crore in the current financial year. Somasekhar Vemuri, puts the total number of large companies impacted by this RBI limit at 60 but added that almost all of them can make up for the change from borrowing from the market. These companies total about 60 and are large ones rated higher than investment grade. Hence, it is likely that they find no issues in raising funds from outside the banking system. Also, due to the gradual phasing of this regulation over the past two years, we do not expect any disruption for these com- panies, Vemuri said. Bank exposure to bonds issued by these companies will also be included in the calculation according to the RBI communication and banks will have to divest their investments in these instruments by March 2021. However, bankers say that a step by step implementation of the RBI guidelines means that the banking system is not risking any disruption. These are companies which have been dealing with the markets for a long time now. They are a mix of private sector and government companies from diverse sectors like steel, infrastructure and telecom. They have already altered their funding mix and will continue to do so. Banks will also look to re-balance their exposure with respect to these companies, said Jairam Sridharan.

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ERICSSON MOVES SC TO END INSOLVENCY CASE

Ericsson filed an application in the Supreme Court on Monday, requesting to end insolvency proceedings it started against Anil Ambani-led Reliance Communications. The telecom company too filed an affidavit in the top court, seeking to drop contempt charges against its chairman since the company has settled the matter with the Swedish equipment supplier as per court's orders. An Ericsson spokesperson confirmed the company moving the court to end the proceedings. The filings from both sides will bring to an end Ericsson's 18-month battle with RCom over network maintenance arrears. 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 to the National Company Law Appellate Tribunal, where a settlement amount of Rs 550 crore was reached between the two parties. After RCom failed to meet deadlines, including those mandated by the Supreme Court, Ericsson filed for contempt of court against the telco's chairman.

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LISTED COMPANIES TO SENSITIZE ON THE FILING OF INFORMATION ON ELECTRONIC PLATFORM OF NSE

NSE has issued circular to all Listed Companies to sensitize on the Filing of Information on Electronic Platform of NSE. As the NSE has introduced seamless announcement filing mechanism on NEAPS for the events such as Corporate Insolvency Resolution Process; Conversion; Preferential issue; Restructuring; Name Change; Forfeiture of securities; Acquisition; Corporate Debt Restructuring; Demerger; FCCBs; Redemption; Scheme of Arrangement; Voluntary Delisting; Amalgamation/Merger; Diversification / Disinvestment; Retirement; Change in Company Secretary/Compliance Officer; Memorandum of Understanding / Agreements; Post Offer Public Announcement; Utilisation of Funds and Withdrawal. Under this seamless system, the information will get disseminated as has been filed by listed entity. Listed entity shall exercise due care while filing the announcement and shall be solely answerable for the announcement. This system will be in effect from March 26, 2019.

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GURUGRAM: RWA MOVES NCLT AGAINST VIPUL OVER UPKEEP FUNDS

The residents’ welfare association (RWA) of Vipul Greens residential complex in Sector 48 filed a petition with the National Company Law Tribunal (NCLT) against the developer for withholding interest free maintenance security deposit (IFMS) even though the township was transferred in April last year. While the petition was filed earlier this month, the tribunal has now sent a notice to debtor Vipul Limited, asking the developer to appear before it for a hearing on March 27. Residents in the township said the developer had received six occupancy certificates (OC) by 2013, but the developer had not transferred the maintenance to RWA yet. They added that the IFMS, which they paid at a rate of Rs 50 per sq. ft. had not been returned. The flats were handed over to occupants from 2007 to 2011, said RWA president Sant Kumar, adding, By March 2013, the condominium was completed and all six OCs were obtained by the developer. As per the provisions of the Haryana Apartment Ownership Act, 1983, the builder was obligated to hand over the maintenance of the complex immediately after obtaining OCs. However, the developer maintained its control till March 2018. Kumar said, The annual upkeep cost is around Rs 6 crore, and we are finding it very difficult to manage without the security deposit. The township is also aging and requires more funds for better upkeep. Sunil Pachar, an RWA member, said, The security deposit and consequential interest aggregates to around Rs 10 crore.

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GOVT MOVES NCLT SEEKING IMMUNITY FOR DIRECTORS OF IL&FS SUBSIDIARIES

The government on Monday filed an application with the National Company Law Tribunal (NCLT) here, seeking immunity for the newly-appointed directors of the subsidiaries of the crippled IL&FS group from any future adverse outcomes. It can be noted that soon after taking over the company after its defaults and appointing a new board last October, the government had sought immunity to the newly- appointed six directors of the group from any legal action against them for the past deeds of old directors. We are issuing a direction that for the past actions of the suspended directors or any of the officers of the company and the past wrongs of the suspended directors and its officials, no action should be initiated against the newly- appointed director, without prior approval of the tribunal, NCLT Mumbai had said in an interim order on October 5. Meanwhile, IL&FS has also filed an application seeking dispensation from appointing independent director on the group companies. A two-member NCLT bench of VP Singh and Ravikumar Duraisamy scheduled both the matters for detailed hearing on April 12.

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VICEROY INSOLVENCY CASE: CFM ASSET RECONSTRUCTION RESOLUTION PLAN GETS COC NOD

The Committee of Creditors has identified the resolution plan of CFM Asset Reconstruction Company for the Hyderabad-based hospitality chain Viceroy Hotels Ltd. Viceroy Hotels is facing a case under the Insolvency and Banking Code 2016, and after several extensions to enable the Committee of Creditors to finalise the resolution plan, the lenders have chosen the resolution plan of Asset Reconstruction Company. The matter relating to Viceroy Hotels’ insolvency is under consideration by the National Company Law Tribunal in Hyderabad. The shortlisting of the resolution plan has come through after e-voting on the resolutions were put to vote at the 18th meeting of the Committee of Creditors on March 19 and concluded on March 20. While the Committee of Creditors has put their stamp on the resolution plan submitted by CFM Asset Reconstruction Company, this is subject to a nod by NCLT. In another petition moved by the Tourism Finance Corporation of India Ltd against Cafe D’ Lake, a Viceroy Hotels unit and a subsidiary, NCLT has appointed M Vijaya Bhaskara Rao as Interim Resoluion Professional to carry out functions in line with the Insolvency and Banking Code, to find a solution. K Anantha Padmanabha Swamy, Member Judicial, NCLT, Hyderabad, in its order held that the Financial Creditor Tourism Finance Corporation of India Ltd has fulfilled all the requirements of law and has also proposed the name of IRP, after obtaining its written consent.

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THE RCOM-ERICSSON CASE IS A ONE-OFF IN BANKING SECTOR'S NPA CRISIS

Indian banks are famous for dragging their feet in taking decisions over soured loans In the past, they had the full support of their regulator, the Reserve Bank of India (RBI), although that backing has waned in recent years. Still, old habits die hard. State Bank of India chairman Rajnish Kumar said last week that lenders to Jet Airways (India) Ltd would make every effort to keep the airline from slipping into bankruptcy as it would further erode the company’s value. Such an approach is fraught with risks. What’s more, this was soon after an operational creditor, Ericsson AB, won a case in the Supreme Court that made Reliance Communications Ltd (RCom) pay it nearly half of what it was owed. This left banks red-faced, as Ericsson, an unsecured creditor, moved from being among the last in the queue for recovery, to first. But to paint the Ericsson win as a complete failure for banks would be unfair. Ericsson’s repayment was the result of a contempt order from the Supreme Court that involved a jail term for RCom’s promoter if he failed to comply with the order. The amount involved as dues was also small. The ₹1,150 crore dues is paltry compared with banks’ exposure of roughly ₹40,000 crore. Operational creditors have been able to get back money from errant companies through the threat of insolvency proceedings in other instances. Even so, these cases show that Indian banks are terrified of taking companies to insolvency courts though they see little hope in getting their money back on time. While there have been cases where companies have been dragged to the bankruptcy process, in a large number of cases, that was at the prodding of RBI. The prime reason for this fear is that a resolution plan in their case would have to involve deep haircuts. We can understand why bankers are reluctant for insolvency proceedings in some cases where a services company is involved. IBC is not the ideal platform to take a services company because they are thin on assets, said Abizer Diwanji. IBC is the Insolvency and Bankruptcy Code. Liquidation is akin to writing off the entire loan. A precursor to those haircuts would be the mandated 50% provisioning against the loan once the borrower is admitted to insolvency courts. A restructuring, on the other hand, would entail only 15% provisioning. Already bleeding due to provisioning against legacy stock of bad loans, banks do not want the nascent recovery in their balance sheets to be snuffed out by another wave of provisioning. In the case of Jet Airways too, it remains to be seen how long bankers can prolong the inevitable. The resolution plan would without doubt contain a debt-to-equity conversion. Emergency funds of ₹1,200 crore will be provided, as per media reports. Ironically, banks will now own the very companies which had turned defaulters. Finding a strategic buyer and keeping haircut to the minimum is like the dream of having the cake and eating it too. In the case of Kingfisher Airlines, a similar arrangement had blown up in their face.

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GOVT MOVES NCLT SEEKING IMMUNITY FOR IL&FS BOARD MEMBERS

The government on Monday filed an application with the National Company Law Tribunal (NCLT), seeking immunity for the newly-appointed directors of the crippled IL&FS group from any future adverse outcomes. The corporate affairs ministry has moved the Mumbai NCLT seeking protection for these directors from any future adverse proceedings as a precautionary measure. Meanwhile, IL&FS has also filed an application seeking dispensation from appointing independent director on the group companies. A two-member NCLT bench of VP Singh and Ravikumar Duraisamy scheduled both the matters for detailed hearing on 12 April.

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HOTEL LEELAVENTURE SEEKS SHAREHOLDERS' NOD FOR ASSET SALE

Hotel Leelaventure is seeking shareholders' nod to sell four hotels including one in the national capital, and other assets to Canadian investment fund Brookfield Asset Management for Rs 3,950 crore. In a regulatory filing Monday, the company said it is seeking approval for special resolutions from its shareholders through postal ballots to sell the different hotels. As per the postal ballot notice, the company said its board has approved selling The Leela Palace, New Delhi together with all its assets and liabilities as a going concern, on a 'slump sale' basis, to an Indian subsidiary of BSREP Ill India Ballet Pte Ltd (Brookfield) for a lumpsum consideration of Rs 1,705 crore. Similarly, the board has also approved selling of the company's Bengaluru hotel undertaking as a going concern on a 'slump sale' basis to Brookfield for a lumpsum consideration of Rs 1,000 crore. The company further said its Chennai hotel will be sold to the same buyer in a similar manner for a lumpsum consideration of Rs 675 crore. The Udaipur hotel undertaking will also be sold for a lumpsum consideration of Rs 320 crore. Further, Hotel Leelaventure said the board has approved sale of its hotel operations undertaking pertaining to hotel management operations together with all its assets and liabilities for Rs 135 crore.

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NCLAT SETS ASIDE JYOTI STRUCTURES LIQUIDATION, ASKS NCLT TO CONSIDER RS 4K-CR PLAN BY SANGHI, OTHERS

The National Company Law Appellate Tribunal (NCLAT) has set aside the order to liquidate Jyoti Structure and asked the Mumbai bench of NCLT to consider the Rs 4,000-crore resolution plan submitted by Sharad Sanghi and others. Allowing the appeal filed by Sanghi in this regard, a two-member bench headed by Chairman Justice S J Mukhopadhaya has remitted back the matter to the Mumbai-bench of the National Company Law Tribunal (NCLT) directing it to pass an order within two weeks. The case is remitted to the Adjudicating Authority, Mumbai Bench (NCLT), Mumbai to approve the plan said NCLAT in its order. The appropriate order be passed on an early date preferably within two weeks from the date of the production of the copy of this order, the order added.

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SEBI CLARIFIES ON MF EXPENSES, COMMISSIONS FOR FIRST TIME INVESTORS

The Securities and Exchange Board of India (Sebi) has clarified that trail commissions can be upfronted for Systematic Investment Plans (SIPs) of up to Rs 3,000 per month, per scheme, for first-time investors in mutual fund schemes. Only the first SIP purchased by the investor shall be eligible for upfronting and in case of multiple SIPs being purchased on different dates, the SIP in respect of which the installment starts on the earliest date shall be considered for upfronting, the regulator has said. The said commission should be charged to the scheme as 'commissions' and should account for computing the total expense ratio (TER) differential between regular and direct plans in each scheme. Fund houses can now charge an additional TER of 30 bps for getting business from retail investors from beyond the top 30 cities. Sebi has clarified that inflows of up to Rs 200,000 per transaction by individual investors shall be considered as inflows from retail investors. The regulator has clarified that there shall be no entry load on SIPs registered prior to August 1, 2009. The disclosure had to include scheme AUM and previous day’s NAV. Sebi has clarified that in case of overnight and liquid schemes, the closing AUM and the average AUM of the previous month has to be disclosed on AMFI website daily. However, for cumulative AUM movement of more than 10 per cent from the previous disclosed AUM, the AUM of that day has to be disclosed. Such disclosed AUM becomes the reference AUM for future disclosure of AUM for the month.

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INDIA POSTPONES ACCOUNTING RULES, SPARING BANKS BAD-LOAN PILES

India delayed the introduction of tough new accounting rules for the second year running, in a move that will spare the country’s banks from adding another layer to the $190 billion pile of bad loans on their books. The Reserve Bank of India said late Friday that legislative amendments needed to implement the new Indian Accounting Standards are still under consideration by the government. Accordingly, it has been decided to delay the implementation of the rules until further notice, the RBI added in a statement on its website. The new rules -- based on the IFRS9 standards created in the aftermath of the financial crisis -- were supposed to kick in at the start of the new fiscal year that starts on April 1, after being delayed last year. According to Fitch Ratings’ local unit, India’s state-run lenders would have had to increase provisions by as much as 1.1 trillion rupees ($16 billion) in the fiscal first quarter ending June 30 if the rules had gone ahead. That would have forced public sector lenders to raise substantial amounts of extra capital, beyond the estimated 1.9 trillion rupee infusion already committed by the government for the two-year period to the end of this month, Fitch’s India Ratings & Research said in a report last month.

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START-UPS: INCORPORATION NORMS RELAXED

To boost ease of doing business, especially for small and medium enterprises (SMEs) and start-ups, the ministry of corporate affairs (MCA) has exempted incorporation fee for firms having share capital up to Rs 15 lakh. Earlier, the limit was Rs 10 lakh. The amendment to the Companies (Incorporation) Rules, 2014 to this effect was notified earlier this month. An MCA official said this is part of the government’s efforts to make India a start-up hub. The ministry has also relaxed the requirement to publish the notice of shifting of registered office by any firm in any principal local-language and English newspaper having ‘wide’ circulation, rather than the earlier requirement of ‘widest’ circulation. While analysts welcomed the move, they said the amendments only provide nominal relief. Important thing to note is that if a company is set up with an amount exceeding Rs 15 lakh, the fee will be payable on the entire amount of the authorised share capital and not the differential amount, said Sumit Naib. The amendments, if implemented in letter and spirit, would facilitate the process of shifting a company’s registered office from a procedural perspective and would enhance the ease of doing business including for SMEs and start-ups, he added. Others, though, believe the amendments bring genuine relief to companies facing issues while changing registered office from one state to another and that the earlier mandate of widest specified in the law made it difficult for companies to select the right publication, which gave authorities a legal power to reject applications. However, the terminology ‘wide’ also has its own set of challenges, which stakeholders are expected to face in near future. This amendment has not specified a meaning to the term, leaving the same to the judgement of authorities. This is expected to result in confusion and undue delays in processing of applications. Close to 1 lakh newspapers and periodicals are registered with the Registrar of Newspapers for India, most of which, if selected by any company, would defeat the purpose of amendment application, said Rajat Mohan.

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MCA

Publication of notice u/s 75 of the LLP Act,2008 read with sub Rule 1(b) read with Rules 37(2) - ROC Karnataka

List of LLP Applied for Striking off the name

http://www.mca.gov.in/Ministry/pdf/LLPListRocKarnataka21_22032019.pdf

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SEBI SEEKS GREATER POWERS TO INSPECT BOOKS, FINANCIAL RECORDS OF LISTED FIRMS

With an aim to thwart financial frauds, regulator Sebi has sought powers to conduct inspection of books of accounts of listed companies for contravention of any securities law and also to take direct action against the fraudsters. Besides, Sebi has proposed a heavy penalty for altering, destroying, mutilating, concealing or falsifying records and documents or other tangible objects with an intent to obstruct, impede or influence a legal investigation. At present, Sebi is empowered to conduct such inspections in case of violations relating to insider trading and fraudulent or unfair trade practices. The Sebi Act empowers the regulator to conduct inspection of any book, register or other documents and records of any listed company if it has reasonable grounds to believe that the company has been indulging in insider trading or fraudulent and unfair trade practices relating to securities markets. Sebi has also proposed that any disgorgement order for recovery of illegal gains should be applicable to all joint actors, without making it conditional on the gains or averted losses of the violators. In another amendment to the Sebi Act, the regulator has sought to replace the term 'material or non-public information' with 'unpublished price sensitive information' to bring in greater consistency of legal phrases used for insider trading laws. Also, the penalty for insider trading violations is currently imposed on those dealing in securities on the basis of material or non-public information, which the regulator has suggested changing to while in possession. Regarding the additional penalty, Sebi is of the view that there is a need to create an obligation on an individual not to alter, destroy, mutilate, conceal or falsify the records to hamper investigation and therefore all such acts should be treated as 'fraudulent' and actionable under the securities laws. Such acts would lead to a minimum penalty of Rs 5 lakh, which may extend to Rs 10 crore or three times the amount of profit made from such an act, whichever is higher. In another proposed amendment, Sebi has said no person should employ or assist in employing any device, scheme or artifice to manipulate books of accounts or financial statements of a listed company to directly or indirectly manipulate the share price, or to hide the diversion, siphon off the funds or assets or earnings of a listed firm or a proposed-to-be-listed company. The proposed amendment has been made as per a recommendation of the Fair Market Conduct Committee, constituted by the regulator. Officials said the final decision on the proposed changes would be taken only after taking into account the views of the Finance Ministry and also of the Corporate Affairs Ministry in a few cases. While the Finance Ministry is already in agreement on some proposals, there are differences in case of a few others.

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INSOLVENCY AND BANKRUPTCY CODE POSSIBLE FOR JET AIRWAYS IF NO RESOLUTION: OFFICIAL

The Jet Airways crisis could eventually head towards insolvency if the creditors fail to reach a consensus on a resolution plan, a senior official said on Monday. "The creditors and the debtors are in discussion. That's the best process. If there is a good outcome of these negotiations between the creditors and the corporate debtor, then that's better than dragging it to insolvency. But if that's the only option left (going to the Insolvency and Bankruptcy Code -IBC- process), then the bankers will have to take a call at that stage," Corporate Affairs secretary Injeti Srinivas said. "IBC is a possibility for Jet Airways if the creditors cannot agree on a resolution plan" he said.

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NCLAT SETS ASIDE JYOTI STRUCTURES LIQUIDATION, ASKS NCLT TO CONSIDER RS 4K-CR PLAN BY SANGHI, OTHERS

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GOVT SHOULD NOT TREAT RBI AT PAR WITH OTHER DEPARTMENTS UNDER ITS CONTROL

At a time when the Reserve Bank of India (RBI) is in loggerheads with the Centre over issues ranging from interest rate cuts to autonomy over its policy decisions, a former RBI official said although the government had upper hand over the RBI, it should maintain a relationship of trust and respect in the larger public interest. The government should look up RBI with pride for its contribution and should not treat the institution at par with any other department under its control, said professor Indira Rajaraman. Rajaraman said, although the relationship between the government and the RBI was not always amicable, the recent steps taken by the government has taken the hostility to a different level. Rajaraman said the two events that led to public display of outrage between the two parties is that the government invoking section 7 of the RBI act, which empowers it to consult and issue directives, and secondly the government questioning the very governance of the RBI instead of raising any particular policy issues. Rajaraman said, that it is under government’s pleasure that the RBI exist so the government has the power to control the central bank. On the functions of the RBI’s central board, Rajaraman said, the board meets at least six times a year and has various subcommittees to deal with various financial and policy matters. But I feel there is no adequate time for the board to fully review and discuss the reports of all subcommittees, Rajaraman added.

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BANKS PLAN TO INVITE BIDS FOR JET AIRWAYS, TATAS MAY BE BACK IN THE FRAY

Lenders are laying the ground for a new owner in Jet Airways as they insist on an undertaking from the shareholders that will trim founder-chairman Naresh Goyal's stake to below 10% while Abu Dhabi-based Etihad will have to agree to exit from the ailing airline. Led by State Bank of India (SBI), lenders are planning to call for open bids to sell Jet Airways after obtaining written agreements from Goyal and Etihad. Goyal, who currently owns 51% of Jet Airways, will have to bring down his stake to 9% and have no voting rights. Etihad, whose holding is at 24%, will have to agree to sell its entire stake if it does not bring in new capital. The Tata Group may be back in the fray for acquiring Jet Airways after such conditions are met. Preliminary talks for a deal were held late last year but the Group had subsequently withdrawn as there was no firm indication that Goyal would step down. We have a two-stage plan and are insisting on an agreement from both the shareholders. Goyal has to cut his stake to 9% while Etihad, which has declined from making additional investments, will have to agree to exit. This will ease the path for us to rope in a new investor, a senior bank official said. Lenders will be subscribing to a 15-year-old zero coupon non-convertible debenture (NCD), issued by Jet Airways, to provide funding of Rs 800-1,000 crore in the interim period to keep the floundering airline afloat. Banks expect to rope in a new investor within four weeks, the source added. In the first stage, Goyal will own 25.5% of Jet Airways, down from 51%, after conversion of debt into equity at Rs 1 a unit. Etihad's stake will fall from 24% to 12% while banks will hold 50% of Jet Airways. Banks have kept a deadline of June 30 to offload the lenders' stake. The downside is that if Jet fails to get in a new investor, it will go into the National Company Law Tribunal (NCLT). If the airline is grounded, it loses a lot of value. So we are willing to provide interim funding to prevent it from being grounded, subject to both the shareholders agreeing to our conditions. This will give us time to get in a new investor. We are prepared to go up to Rs 1,000 crore. But if things don't work it, we will have to drag it down to the NCLT, the official said.

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SECURITIES AND EXCHANGE BOARD OF INDIA (CUSTODIAN) (AMENDMENT) REGULATIONS, 2019

In exercise of the powers conferred by section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following Regulations to further amend the Securities and Exchange Board of India (Custodian) Regulations, 1996, namely :-

1. These Regulations may be called the Securities and Exchange Board of India (Custodian) (Amendment) Regulations, 2019

2. They shall come into force on the date of their publication in the Official Gazette.

3. In the Securities and Exchange Board of India (Custodian) Regulations, 1996 –

(1) regulation 9A shall be substituted with the following, namely,-

Period of Validity

9A. Every certificate granted under sub-regulation (3) of regulation 8, shall be valid unless it is suspended or cancelled by the Board.;

(2) regulation 9B shall be omitted;

(3) in Second Schedule,

(i) in the title, the words and expression 3(3), 8 and 9(C) shall be substituted with the words and expression 3(3) and 8;

(ii) in Part A, Explanation II shall be omitted.

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RELIANCE COMMUNICATIONS ENTERPRISES PLEDGES 12.50 CR RCOM SHARES WITH INDUSIND BANK

Reliance Communications Enterprises has pledged 4.52 per cent of its holding in Reliance Communications (RCom) amounting to 12.50 crore shares with IndusInd Bank Ltd, according to a regulatory filing. Reliance Communications Enterprises (RCE) held 49.06 crore shares in RCom amounting to 17.74 per cent stake, of which it had previously pledged 4.85 per cent. With the latest pledge on March 22, the total pledged shares by RCE now stands at 9.37 per cent of total share capital or 25.90 crore shares.

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RBI'S RS 3-TRN BOND BUYS THIS FISCAL COULD DISTORT MARKET: DEUTSCHE BANK

The Indian central bank’s purchases of bonds to inject cash into the financial system may have an unintended effect of distorting bond prices according to Deutsche Bank AG. The Reserve Bank of India should instead consider cutting the cash reserve ratio a move it last resorted to six years ago, as various reserve requirements enforced by the authority so far are curbing deposit growth and transmission of rate cuts, said Srinivas Varadarajan. Open-market operation interventions beyond a point do have an impact on the micro structure of the government bond market, he said in an interview. The RBI should look at CRR in addition to OMOs as active instruments to manage durable liquidity in the system. The central bank has bought a record Rs 3 trillion ($43.5 billion) of government bonds so far this fiscal year to ease a cash crunch and is set to inject rupee liquidity via a dollar/rupee swap auction worth $5 billion on March 26. The purchase of bonds through OMOs has led to steepening of the yield curve as most of the buying was concentrated at the shorter end. The introduction of the currency swap tool to inject cash has led to some speculation that the RBI may cut down on OMOs.

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CREDIT RATING COS WILLING TO OFFER SERVICES AT JUST RS 1,100

Credit rating agencies are ready to offer their services for as low as Rs 1,100 Also, they are willing to receive the fee well after the process is complete –– and not in advance which is the customary practice. State-run National Highways Authority of India (NHAI) recently invited bids from credit rating agencies to rate its upcoming Rs 75,000-crore bond issuance. The unusually low fee bids came in the wake of the Reserve Bank of India expressing displeasure about credit rating agencies’ business practices, including the so-called rating shopping. Four rating agencies — Crisil, Care Ratings, India Ratings and Icra –– had placed bids for rating the upcoming NHAI bond issue. When the bids were opened last week, three rating agencies –– Crisil, Care Ratings and India Ratings –– had placed their bids at Rs 1,100, while Icra had put in a bid of Rs 1,500. It’s quite surprising that all the three rating firms have quoted the same amount, said a banker who wished not to be quoted. Rating agencies traditionally charge 4-10 basis points. But, if this percentage translates into high fees in absolute terms like in the case of NHAI, it would bring in another methodology. This is the first time that credit rating agencies have quoted such low fees. It doesn’t even cover the cost of stationary expenses said a person familiar with the development. This practice is promoting a clear standard of rating shopping. Even NHAI officials were amused how they quoted such low fee, the person said. Rules now require rating agencies to maintain better transition and default statistics, said another person familiar with the development. Rating agencies have become desperate to acquire higher rated issuers who issue large amount of debt at whatever rate possible. Globally, credit rating agencies disclose their rating fee structure. In India, there is no such requirement for bond ratings.

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NCLT DISMISSES LIBERTY PLEA AGAINST REJECTION OF ITS PLAN FOR INFINITAS

Citing the legal position laid down by the Supreme Court recently, the Chennai bench of the National Company Law Tribunal (NCLT) has dismissed an application by UK-based industrial and metals company Liberty House group, challenging the rejection of its resolution plan for Chennai-based beleaguered renewable power infrastructure solution provider, Infinitas Energy Solutions. The bench of Mohd Sharief Tariq ruled that the resolution professional, the adjudicating authority or appellate authority, were not empowered to reverse the commercial decision of committee of creditors (CoC). In view of the reasons recorded by the CoC for rejection of the resolution plan by Liberty House and the legal proposition laid down by the apex court, the resolution applicant has no vested right to challenge the rejection of its resolution plan, he said. The SC had ruled that the NCLT has no authority to evaluate the commercial decision of the CoC to approve or reject a proposed resolution plan in K Sashidhar vs Indian Overseas Bank case. The SC said that there was no provision in the Insolvency and Bankruptcy Code (IBC) that empowers the resolution professional or the adjudicating authorities (NCLT & NCLAT) to reverse the commercial decision of the CoC. According to Liberty House, which filed the plea against the rejection, the main issue it wanted to get an answer was as to whether the liquidation of the corporate debtor (Infinitas Energy) can be permitted if a resolution plan is rejected for reasons extraneous to the scheme of the IBC. The NCLT bench observed that the CoC, while rejecting or accepting the resolution plan, is under obligation to strike a balance between the interests of the creditors and corporate debtor.

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BANK OF AMERICA TAKES OVER JAYASWAL NECO LOAN WORTH RS3,290 CRORE

Bank of America (BoA) has taken over loans worth around Rs3,290 crore owed by city-based company, Jayaswal Neco Industries Limited (JNIL) to a consortium of financial institutions led by SBI. The loans had turned NPA and were among the major stressed assets with the Indian banks JNIL which was named in the coal block allocation scam under the UPA regime had been going through a tough phase following a slump in the steel casting business in which it deals. Sources privy to the deal said loans worth Rs 4,700 crore which form nearly 88% of JNIL’s total debt were auctioned through the National Company Law Tribunal (NCLT). BoA was the single bidder which took over the loans at 70% of the value. Or in other words banks have taken a haircut of 30% in the loans granted to JNIL. The bank has been particularly looking for certain potentially good projects where the loans have been defaulted for whatever reasons, said independent sources. In this case 88% of the loans were auctioned. Now in turn BoA will be looking for potential investors who would be taking over the debt and later convert it into equity. This will also pave way in bringing a professional management in the company through the new stakeholders. Since BoA has major part of the debt, it is expected to have a say in the future proceedings related to JNIL’s remaining loans too. When contacted, BoA officials refused to comment. BoA has brought the JNIL deal through an asset reconstruction company Assets Care and Reconstruction Enterprise (ARCE). JNIL’s name had featured in second list of stressed accounts released by the RBI. Once a major name in the city’s business circles, JNIL is run by the Jayaswal family with the patriarch Bastanlal Jayaswal at the helm.

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GRASIM GETS INTERIM RELIEF ON RS 5,872 CRORE DIVIDEND TAX CLAIM

The Bombay High Court on Friday granted interim relief to Grasim Industries, the flagship company of the Aditya Birla Group, on a Rs 5,872-crore dividend distribution tax demand linked to a 2016 demerger plan of group businesses. The revenue department had raised the demand on Aditya Birla Capital (ABCL) shares that Grasim received after the demerger of Aditya Birla Capital from Aditya Birla Nuvo. The restructuring was part of a plan that involved the merger of Aditya Birla Nuvo with Grasim. However, after the merger, the financial services business of Aditya Birla Nuvo was demerged into Aditya Birla Capital. In 2017, the Ahmedabad bench of the National Company Law Tribunal (NCLT) approved the demerger. The company has, on March 15, received an order issued by the deputy commissioner of Income Tax raising a demand of Rs 5,872.13 crore on account of Dividend Distribution Tax (DDT) that includes interest, argued a counsel representing Birla Group in the court. The order is not as per income tax norms. The division bench of justice Akil Kureshi and justice SV Kotwal, while allowing an interim stay, said the revenue department had raised a huge tax demand and directed the firm to deposit the amount without giving enough time to file an appeal. The court has asked the tax department to file its reply, adjourning the case to April 12.

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MUTUAL FUNDS: SEBI ISSUES NORMS FOR VALUATION OF BELOW INVESTMENT GRADE DEBT SECURITIES

Sebi Friday came out with norms for valuation of money market and debt securities that are rated below investment grade, a move aimed at ensuring uniformity and consistency in valuation across the mutual fund industry. In a circular, the regulator said all money market and debt securities which are rated below investment grade shall be valued at the price provided by valuation agencies. Till the agencies compute the valuations, such securities would be valued on the basis of indicative haircuts provided by the agencies. AMCs (asset management companies) may deviate from the indicative haircuts and/ or the valuation price for money market and debt securities rated below investment grade provided by the valuation agencies subject to certain conditions, the circular said. The detailed rationale for deviation from the price post haircuts or the price provided by the valuation agencies should be recorded by the AMC. Further, AMCs should immediately disclose instances of deviations under a separate head on their websites. In case of trades during the interim period between date of credit event and receipt of valuation price from valuation agencies, AMCs shall consider such traded price for valuation if it is lower than the price post standard haircut. The said traded price shall be considered for valuation till the valuation price is determined by the valuation agencies, it said. Besides, the residual maturity for amortisation-based valuation would be reduced from existing 60 days to 30 days.

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SEBI EXEMPTS GOVT FROM OPEN OFFER FOR UNION BANK AFTER CAPITAL INFUSION

Markets regulator Sebi Friday exempted the central government from making an open offer for the shareholders of Union Bank of India following capital infusion. In February, the government proposed a capital infusion of Rs 4,112 crore in the public sector lender through preferential allotment of shares. The infusion is to meet certain regulatory requirements. After the preferential allotment, the shareholding of the central government is likely to increase from 67.43 per cent to 73.98 per cent, an increase of 6.55 per cent, which is in excess of 5 per cent during the current financial year 2018-19 thereby attracting takeover provisions. Under the takeover norms, the acquirer is required to make a public announcement of an open offer to acquire shares in case the existing stake goes beyond a certain threshold. According to the Securities and Exchange Board of India (Sebi), there will be no change in control of the bank pursuant to the proposed acquisition. Further, there will be no change in the number of equity shares held in lender by the public shareholders, pursuant to the proposed transactions. Accordingly, it grants exemption to the proposed acquirer viz. the Government of India, from complying with the requirements of Regulation 3(2) of the Takeover Regulations with respect to the proposed acquisition of 6.55 per cent equity shares in the target company viz. Union Bank of India, Sebi said.

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GDR MANIPULATION: SEBI BARS BHORUKA ALUMINIUM, 4 OTHERS FOR FIVE YEARS FROM SECURITIES MARKET

Markets regulator Sebi Friday barred Bhoruka Aluminium Ltd and its four senior officials from securities market for five years in a matter related to alleged manipulation in issuance of global depository receipts (GDR). The regulator conducted a probe regarding the firm's allotment of 1.21 million GDR amounting to USD 10.38 million on the Luxembourg Stock Exchange in December 2010. During the probe, Sebi observed that the entire 1.21 million GDR was subscribed by only one entity, Vintage FZE (now known as Alta Vista International FZE). The subscription amount for GDR was paid by Vintage after obtaining loan from European American Investment Bank (EURAM). However, the loan paid by Vintage was secured by pledge agreement between Bhoruka and EURAM Bank, the regulator said. Bhoruka had facilitated subscription of its own GDR issue by entering into an arrangement where subscriber (Vintage) obtained loan from the Euram Bank for subscribing the GDR which ultimately was pledged by the Bhoruka, the regulator said. Besides, the company made misleading announcements that the GDR was successful whereas there was only one subscriber, Sebi said. Regarding the directors, the regulator said they were the board members and gave approval to the fraudulent arrangement of Bhoruka facilitating the subscription of its own GDR while Dalmia had signed pledge agreement on the behalf of the company, the regulator said.

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KARNATAKA BANK REPORTS FRAUD TO RBI

Karnataka Bank has reported fraud to RBI amounting to Rs.13.26 crore in the fund based working capital facility that was extended to SRS Finance, on account of diversion of funds. The said working capital facility was extended by the Bank under Multiple Banking arrangement and necessary accounting treatment has already been given as per the extant RBI Guidelines.

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THE GREAT CORPORATE SPRING CLEANING

During previous governments, big corporate borrowers were not overly concerned if they were unable, (or unwilling) to service their debt obligations to banks, mainly public sector ones. The governments obliged with several schemes to roll over the bad loans, and with bank managements having the ability to decide whether or not to classify the non-performing loans as such, and to provide for them (bringing down profits), the NPA skeletons were pushed to the back of the cupboard. Governments, and times, changed. The RBI removed subjectivity of classification and introduced objective criteria Banks needed to classify the laggards as NPAs, and to provide for them. Overnight, the colour of their P&L changed, even before Holi, from black to bright red. Non-performing asset levels rose to mid teens and banks sought more capital from the government to be able to lend to borrowers to kick-start the investment cycle. This government introduced legislation such as the Bankruptcy Law, and the Fugitive Act, and these are starting to bite. Economic fugitives are facing the heat; Vijay Mallya has been ordered to be extradited back to India (he has appealed), and Nirav Modi has been arrested and is behind bars for a week, pending trial and likely extradition. Big defaulting borrowers have been sold under the Bankruptcy Law, such as Essar Steel, sold to Arcelor. There was a last minute offer by the Ruias to make full repayment, which the court rightly took as a stalling tactic, and asked them to repay the rest of the debt for their offer for Essar Steel to be considered. Some defaulters managed to strike deals for sale of assets; for example, the Leela group sold its remaining hotels to Canadian alternative assets firm Brookfield, for Rs. 3,950 crore.

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BSE HANDS OVER SUN PHARMA DEC TRADE DETAILS TO MUMBAI POLICE

The Bombay Stock Exchange (BSE) has given Mumbai police the derivative trading details on Sun Pharma for the December contract, with law enforcement seeking to ascertain whether some traders had conspired with an equity research team to hammer the stock of India’s biggest drug-maker. The BSE response comes after the police’s Economic Offences Wing (EOW), taking forward a complaint by Sudhir Valia & Associates, had begun a preliminary enquiry (PE) against Macquarie Group, which circulated an investment note that raised alleged corporate governance concerns at Sun Pharma. The National Stock Exchange, the competing bourse also based in Mumbai, is yet to provide the police Sun Pharma’s trading details on its platform. Valia, linked to the Sun Pharma promoter family, had complained that a note prepared and circulated by Macquarie Group pulled down the share price from Rs 510 to Rs 410 eroding market capitalisation by Rs 20,000 crore in December. Valia alleged that the note, titled ‘The murky waters of Sun Pharma & Co’, (was) issued to investors to unduly benefit select clients by maliciously defaming Sun Incidentally, this note was leaked at the same time as the month-end settlement cycle drew near. This gave a massive advantage to short sellers. Apparently, people involved in drafting and circulating the note were successful in their objective to substantially pull down (the) share price, said the complaint. The Macquarie note had raised questions about alleged inadequate disclosures regarding the role of promoter Dilip Shanghvi’s brother-in-law Sudhir Valia, Sun’s past links with banned traders Ketan Parekh and Dharmesh Doshi, and related party transactions. The police probe is focused on whether investment firms or traders colluded with the Australian multinational independent investment bank that had written the research note. Sleuths have also written to market regulator SEBI, seeking details whether the note, the fall in share prices and potential beneficiaries are linked. SEBI’s reply is awaited.

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L&T BID: MINDTREE FOUNDER SAYS 'OFFERED HUGE BAGS OF MONEY' TO GIVE AWAY COMPANY

Amidst a takeover bid, IT services firm Mindtree’s founder and former CEO, Subroto Bagchi, has revealed that he along with other promoters - Krishnakumar Natarajan, Rostow Ravanan and Parthasarathy N S - were offered huge bags of money to give Mindtree away. In a letter to employees, Bagchi said: KK, Rostow, Partha and I were offered huge bags of money to give Mindtree away. We have respectfully said 'no' to their overtures. Our polite refusal has been interpreted as foolish idealism of a bunch of lower middle-class folks. That, we are. Bagchi informed the employees that he had quit from his current position as the chairman of Odisha Skill Development Authority and has rejoined Mindtree. I cannot stay miles away, ensconced in another world to live the nightmare that the builders have arrived with the excavators, bulldozers, chainsaws, cranes and the impeccably drawn up blueprint to raze Mindtree. I have with great pain, resigned my official position as chairman of Odisha Skill Development Authority. I want to be on the spot with you because I will not be able to explain to my creator as to why his gardener wasn’t there when the Tree was sought to be destroyed, he said.

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JIO GETS NCLT 'OK' TO DEMERGE FIBRE, TOWER ASSETS

Reliance Jio Infocomm (Jio) has received a nod from the company law tribunal to hive off its fibre and tower businesses into two separate units, which the telco hopes to monetize in the near future. Further to our letters dated December 11, 2018 and February 19, 2019, we would like to inform that the Hon'ble National Company Law Tribunal, Ahmedabad Bench, vide its Order dated March 20, 2019, has approved the Scheme said the operator in a regulatory filing on Friday. The company is seeking regulatory approvals for demerging the fibre and tower businesses into Jio Digital Fibre Pvt Ltd and Reliance Jio Infratel Pvt Ltd, respectively. The end objective will be to have different set of investors who would want to run these companies. This means that these assets go off our balance sheets, so the liabilities also go down, RIL’s joint chief financial officer (CFO) Srikanth Venkatachari told.

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GOVT GARNERS RS 700 CRORE VIA FIRST EVER SALE OF ENEMY SHARES

Sale of 'enemy shares' and buyback of stocks by CPSEs have together yielded the government over Rs 11,300 crore thus helping the exchequer mop up Rs 85,000 crore from disinvestment in the current fiscal -- the second highest receipt ever. The government has garnered Rs 700 crore through the first ever sale of 'enemy shares' after the Cabinet in November 2018 gave its go-ahead to the Department of Investment and Public Asset Management (DIPAM) to sell such shares held in companies. Enemy property refers to the assets left behind by people who migrated to Pakistan or China and are no longer citizens of India. Besides, over Rs 10,600 crore has come in from buyback of government shares by Central Public Sector Enterprises (CPSEs). In addition, the government has received Rs 1,929 crore via initial public offering (IPO) of five companies -- MSTC, RITES, Ircon, Garden Reach Shipbuilders and Midhani. The government has received Rs 5,218 crore from offer for sale (OFS) of Coal India, and another Rs 5,379 crore from sale of SUUTI stake in Axis Bank.

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BITTER NPA PILL FOR RENUKA SUGARS’ LENDERS

A stern interpretation by the Reserve Bank of India (RBI) of its contentious February 12 circular has stunned banks. The regulator has told banks to categorise a particular loan account as non-performing asset (NPA) almost a year after the borrower’s debt was rejigged and the firm had received fresh capital infusion. The company in question is Shree Renuka Sugars which became a subsidiary of the Singapore-based Wilmar Sugar Holdings (WSH) in 2018 following what was billed as one of the largest foreign direct investment in the agriculture sector. But RBI in a letter to lending banks last week said that their loans should carry the NPA tag because a higher stake held by Wilmar now does not amount to a ‘change in management and ownership’. Wilmar currently holds more than 58% in Renuka, India’s leading sugar company. Since Wilmar was a minority shareholder earlier, RBI is refusing to recognise a ‘change of ownership’ in Renuka even though the former CEO Narendra Murkumbi had resigned. This is a technical, literal interpretation of the law, a senior banker told. Such a regulatory stance could stand in the way of debt resolution in other companies. For instance, hypothetically, if Etihad had raised its holding in Jet, (founder) Naresh Goyal moves out, and the company’s debt is restructured under a new scheme, will RBI still insist that is no change of management and the exposure is not a ‘standard loan account’ just because Etihad holds 24% now, said another banker. Renuka has not defaulted after the loans were restructured. According to RBI’s February 12 circular, credit facilities of borrowing entities may be upgraded as ‘standard’ (from NPA) after a change in ownership is implemented, either under the Insolvency & Bankruptcy Code (IBC) or under the debt restructuring framework outlined in the circular. Wilmar held 38.57% stake in Shree Renuka Sugars as on March 2018. Following capital infusion and open offer, amounting to an investment of Rs 1,200 crore, Wilmar acquired majority control. Wilmar also gave a guarantee of Rs 2,700 crore as part of the debt resolution which was agreed in March 2018. Renuka Sugars’ standalone debt at the end of September 2019 was Rs 2,117 crore. In a case where a debt-ridden company is classified as a ‘standard account’ following a change in management, banks have to ensure that among other things, the acquirer is not a person disqualified in terms of Section 29A of the Insolvency and Bankruptcy Code, 2016. This section bars defaulting promoters and ‘related persons’ from bidding for assets.

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M&A DEAL VALUE DROPS 34 PER CENT TO $1.24 BILLION IN FEBRUARY

The value of merger and acquisition (M&A) deals in February slumped 34 per cent to $1.24 billion compared to the year-ago period, according to a report. Leading consultancy Grant Thornton’s report showed that number of M&A transactions last month rose marginally to 44 last month whereas the same was at 40 in February 2018. While February 2019 recorded same number of deals valued and estimated at over $100 million as witnessed in February 2018, the high valued deals totalled to only $0.9 billion compared to $1.5 billion in February 2018, it said.

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VARUN BEVERAGES GETS CCI APPROVAL TO ACQUIRE PEPSICO'S FRANCHISE RIGHTS

PepsiCo India's bottling partner Varun Beverages Ltd (VBL) Monday said it has received nod from the Competition Commission of India for its proposal to acquire franchise rights of the foods and snacks major in southern and western India. The Competition Commission of India (CCI) in its meeting held on March 22 considered and approved the proposed acquisition, VBL said in a regulatory filing. In February, VBL had announced its plans to acquire franchise rights of PepsiCo in southern and western regions. Upon completion of the acquisition, VBL will be a franchise of PepsiCo beverages business across 27 states and seven UTs, it had said.

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NSE EYES 350-375 TONNES OF DOMESTICALLY REFINED GOLD MARKET FOR DERIVATIVES

With over 350-375 tonnes of the domestically refined gold market still away from the organised trading platforms in India, the National Stock Exchange of India (NSE) has decided to accept it as good delivery on its derivatives platform. So far, only London Bullion Market Association recognised bullion is accepted as good delivery on the exchange platform. NSE has initiated a move to decide India good delivery norms for gold including sourcing norms for gold refined and unrefined (dore). The process of finalizing new norms and implementing is expected to take two months. These are significant as in last few years Indian bullion refineries’ business has increased and in 2018 domestically refined gold contributed from dore and recycled gold to half (350-375 tonnes) of the domestic gold demand. However, on gold futures exchanges this gold cannot be delivered. This means domestic refineries have limited access to hedge their future production on exchange platform as they can’t deliver gold the refine on exchange platform. India’s domestic physical gold demand is 600 tonnes for jewellery and 160-175 tonnes of investment demand, according to the World Gold Council 2018 data. 275 tonnes of gold was supplied by Indian gold refineries and 87 tonnes of gold was derived from scrap or recycled gold. Indian metal companies also derive gold from ores of other metals during the process of refining them. This was 8.6 tonnes. All these can now be deliverable on the futures market once India goods delivery norms are in place.

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IDBI BANK STILL IN PUBLIC SECTOR; NO THREAT OF JOB LOSSES

IDBI Bank still retains the character of a state-run lender and will continue to be governed by existing rules on hiring even though it is technically a private bank now due to a drop in the government’s holding following the acquisition of a 51% stake by LIC, official sources told. Meanwhile, the All India Bank Employees’ Association (AIBEA) on Wednesday wrote to the Reserve Bank of India (RBI), asking the regulator to reconsider its decision to categorise the bank as a private entity. A senior government official said: Although technically, IDBI Bank is not a public sector bank (PSB), there can’t be any retrenchment of employees following the LIC acquisition, as existing rules will continue to be applicable. So, there is no threat to the job of any employee. Any reservation policy (for hiring SC/ST candidates and others), too, will continue. In short, everything remains the same, only the status has changed on paper.

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DEBT MFS’ ALLOCATION TO GOVT. SECURITIES HALVES IN 11 MONTHS

An analysis shows that there has been a significant shift in the manner debt schemes deploy their funds with the allocation towards government securities having halved since March 2018 and the share of corporate debt paper also witnessing a fall while investment in instruments such as bank fixed deposits, asset backed securities, equity-linked debentures and other money market instruments have almost doubled between March 2018 and February 2019. A shift in deployment of funds by debt MFs was witnessed in the initial 11 months of FY19, said the latest analysis by CARE Ratings. According to the agency, allocations towards government securities have halved since March 2018, while the share of corporate debt paper, including floating rate bonds, non-convertible debentures, fell from 38% in March 2018 to 31% in February 2019. The share of certificates of deposit and PSU bonds/debt has dropped marginally in February 2019, compared with March 2018. Investment in other asset types almost doubled from 8% in March 2018 to 15% in February 2019. This segment includes treasury bills, other money market investments, equity linked debentures/notes, asset backed securities, bank FD, etc., as per the CARE Ratings report. Incidentally, the overall exposure of mutual funds towards non-banking finance companies (NBFCs) has dropped from 19% in July 2018 to 15.6% in February 2019. Further, as per CARE Ratings, after the liquidity crisis triggered in the NBFC space, mutual funds withdrew more than one-third of their investments from commercial papers. The percentage share of funds deployed in commercial papers of NBFCs was at the lowest at 7.7% in February 2019, since December 2017, said the report, while adding that debt mutual funds held ₹1.08 lakh crore funds in commercial papers of NBFCs in February 2019.

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CHINA’S VC INVESTMENTS IN INDIAN START-UPS HIT $5.6 BILLION IN 2018

The inflow of Chinese venture capital (VC) funds into India continues to grow exponentially despite the geopolitical tensions between the two countries. The Chinese VC funds surpassed those coming from the US and Japan in 2018. According to data collated by research and analytics platform Tracxn, the China’s VC investment into the Indian start-up ecosystem has increased five-fold at $5.6 billion in 2018 compared to a mere $668 million in 2016 and around $3 billion in 2017. The increased inflow to Asia’s third largest economy. Among the top Chinese investors that focussed in the Indian market were Alibaba, Shunwei Capital, Fosun Tencent and Xiaomi, which wrote larger cheques last year compared with the previous year. The data also showed that sectors such as consumers, food-tech, logistics, retail, artificial intelligence, Internet of Things and fintech, attracted the maximum investments from the Chinese VCs thus helping Indian start-ups to boost their valuations. However, even though the geopolitical situation between the two neighbouring countries is worsening by the day, experts believe the trade relation is not going to get impacted and more so the investments into the start-up space is likely to grow. He further added that the Chinese capital requires no major privacy and security treatment from any other capital and India has enough safeguards with regards to all investors. In the first Startup India Investment Seminar held in Beijing last year, 12 Indian start-ups participated out of which four secured funding from Chinese venture capitalists to the tune of $15 million.

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FEDERAL RESERVE SIGNALS FOR INDIAN INVESTMENTS

The signalling at the Federal Reserve of the US meeting last week that no more interest rate hikes should be expected during 2019 has ramifications across the globe given the scale of the US economy and the importance of Federal Reserve policy to global investments. From the perspective of the Indian investment community, there are some crucial takeaways and the reiteration of a few existing trends First, given that global G-10 bond markets have seen a structural bull trend over the last three decades with interest rates moving lower, from a portfolio allocation perspective, the low long-term bond yields in the developed economies will create significant pressure on investment portfolios for investment return generation. Hence, the need to look for alternative mechanisms to boost returns will be even greater post the Federal Reserve meeting last week. This search for higher yield from developed market portfolios provides an avenue for emerging markets such as India to attract some of the capital that sits with developed market investors. Relatively dovish central bank policy like the one suggested by the Federal Reserve last week further adds impetus to the trend. The second and the biggest takeaway from the signals provided by the Federal Reserve is that the trends such as the availability of large amounts of capital for investment and the move from institutional investors towards more direct investments are here to stay. As developed economy based investors look towards emerging markets to generate investment returns, India by the sheer size of its market, is a destination for the return-seeking capital. It is true that while large institutional capital allocations from the pension and the insurance industry do consider the absolute level of interest rates, it is as much true that a lot of the significant portfolio allocation decisions are either long-term or structural given the large portfolio sizes. Therefore, lower long-end yields in the developed markets provide India with an opportunity to attract long-dated structural funding for mission-critical businesses and infrastructure. The structural nature of portfolio allocations implies that if attractive investment opportunities are found in India, then the capital being invested does not necessarily face the risk of capital-flight even if interest rates were to move significantly higher in the developed economies in the years to come. Essentially, greater focus towards attracting investment inflows into India which flow into the Indian economy due to structural low-interest rate regimes allows India the leeway to attract higher-quality capital that is focused on long-term returns. The single most significant focus for long-term capital in India must be on the unlisted market and unlisted assets. The greatest challenge for both investors and the government, for obvious reasons, has been directing capital into the unlisted space. Structural changes sweeping across the asset management industry globally such as the recent decision by the California Public Employees' Retirement System (CalPERS) to approve two internal private equity organisations is vital for India. CalPERS decision has two significant ramifications. Firstly, fee structures across the alternative asset management industry are being questioned as investment returns have experienced downward pressure. The pressure to generate higher yields in the face of higher asset management fees also implies a search for greater-yield. A growing market such as India is an obvious investment destination for such funds. Secondly, an institution such as CalPERS with $354 billion under management will need large economies with a relatively high threshold of minimum deal size to operate in.

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FEBRUARY TURNOVER DIPS IN COMMODITY BOURSES

Capital and commodity market regulator SEBI’s decision to ban the top five commodity brokers from the market and the ongoing investigation against another 295 brokers seem to have started impacting the turnover on the commodity exchanges In February, the turnover on MCX, the country’s largest commodity exchange, was down 11 per cent at ₹5.40 lakh crore, against ₹6.09 lakh crore in January. On the NCDEX, the agriculture-focused commodity exchange, the turnover dipped 30 per cent to ₹29 lakh, against ₹41 lakh in January. MCX spokesperson said the average daily turnover in February was higher at ₹27,023 crore, against ₹26,473 crore in January. And, so far in March, it is hovering at ₹26,585 crore. Uttam Bagri, said the link between the fall in the exchanges’ turnover and the ban on the five commodity brokers can be viewed as a curious coincidence right now. However, if the trend sustains for some months, the events could definitely be correlated, he added.

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SEBI BARS 12 WEBSITES FOR GIVING FRAUDULENT MARKET TIPS

Markets regulator Securities and Exchange board of India (Sebi) has barred a dozen of websites after receiving complaints from investors that certain investment advisory portals cheated them. The order contains a list of websites including

· trade4target.com,

· niftysureshot.com,

· mcxbhavishya.com,

· callput.in,

· newsbasedtips.com,

· futuresandoption.com,

· optiontips.in,

· commoditytips.in,

· sharetipslive.com,

· thepremiumstocks.com,

· callputoption.in and

· tradingtipscomplaints.com.

According to Sebi, these advisory firms were engaged in the business of fraudulent investment advisory activity In a release, the markets regulator said, The modus operandi adopted by these noticees shows that they were actually practicing prima facie fraudulent investment advisory activity. From the findings of the examination, it prima facie appears that the noticees were running a premeditated device, plan or scheme where under, the gullible investors would be lured by the unrealistic profit commitments on the websites and then money would be extracted from them in the name of subscription fee and later, the persons operating the websites would vanish. Such fraudulent plan, scheme, device were used by the noticees several times through different websites, the release said. Some of these websites also contained a link over a Sebi logo with the word ‘approved’ below it, which contained the scanned copy of Sebi registration. With an objective to lure investors, these websites were using terms such as ‘zero loss’, ‘jackpot’, ‘rumour based’, ‘sureshot’, etc. in the names of the packages offered in their websites and promise accuracy between 90-99 per cent. The subscription promises investors to get a daily message, tips during live market hours and one-to-one customer support.

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BANKS AND BANKRUPTCIES

The decision by Jet Airways’ lenders to infuse ₹1,500 crore into the beleaguered carrier gives stakeholders a breather to explore turnaround options. However, the introduction of this lifeline at this late stage, with the airline’s debt estimated at over ₹8,000 crore, gives rise to an obvious question: Do lenders generally wake up rather late in the day? Lenders in recent times have been forced to come clean on the extent of non-performing assets, but at the same time are equipped with powers to proceed against defaulters. Regarding the first, the Asset Quality Review process was initiated in 2015. This was soon followed up by an RBI ‘master circular’ on red flagging accounts after identifying ‘early warning signals’ (EWS). The circular lists 45 EWS such as default in payment to statutory bodies, income-tax related issues, frequent changes in scope of the project being undertaken by the borrower, large number of transactions with interconnected companies and significant rise in working capital borrowings, among others. On the second aspect, the Insolvency and Bankruptcy Code is meant to empower creditors, by achieving speedy and reasonable realisations. The IBC is also meant to bring the ailing concern back on track as opposed to liquidating it. In February 2018, the RBI issued a stern circular in banks’ favour, directing that an NPA account be resolved in 180 days or sent into the IBC process. If bankers are still unable to proceed decisively, it is perhaps because the new institutional order, while being a huge step forward in allocating capital efficiently, brings its own uncertainties. It is not clear whether lenders are acting along the lines of the May 2015 EWS circular, even though the subsequent classification of accounts (Special Mention Accounts-1 and 2 for loans that are stressed) has brought about an element of transparency. Questions of mismanagement are scarcely asked. That said, lenders too face their own dilemmas. They are wary of dispatching a firm to the IBC, fearing a huge haircut on their dues and the prospect of delays in resolution. They would rather explore the revival prospects of a concern outside of IBC and bet for a better recovery rate. This is despite the fact that the recovery rate under IBC (nearly 50 per cent) is far better than its forbears such as debt recovery tribunals, Lok Adalats and SARFAESI. The IBC, as a quasi-judicial process, would spare banks of the vigilance risk that has come to accompany major decisions. However, the IBC has come to be viewed as a liquidation rather than revival agency not least because of its track record (79 revival plans approved against 302 liquidations as on December 31, 2018). This bias should change, so that the IBC wins the confidence of the lenders. Meanwhile, the RBI should keep provisional restructuring plans handy, giving recoveries a chance while punishing errant promoters.

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POST DEFAULT, DOT LENS ON RCOM-JIO SPECTRUM DEAL

The Department of Telecom is scrutinising the spectrum-sharing deal between Reliance Communications (RCom) and Reliance Jio Infocomm, after the Anil Ambani company defaulted on a payment of Rs 21 crore towards instalment for spectrum in the Mumbai circle earlier this month. DoT officials are of the view that airwaves in circles for which there has been a default in payment can’t be shared or traded. Jio shares RCom’s airwaves in the 850 MHz band in 21 circles, including Mumbai, and scrapping airwaves could end up disrupting Jio’s services. But the matter could be a long-drawn affair as it’s likely to be decided by the courts in the end, said people familiar with the matter. In addition to the Mumbai circle, for which it has missed the payment deadline RCom — weighed under a debt of Rs 46,000 crore — is due to pay Rs 281crore for eight circles and an additional Rs 492 crore for 13 circles next month. According to DoT officials, who did not want to be identified, the government will be forced to take back spectrum from an operator who does not pay the dues for a specific circle, irrespective of the sharing agreements it has with any other telco. Spectrum is a national asset. One cannot have it and not pay the dues. It does not matter if RCom is using it or Jio. We need to get our dues or we (will) revoke the licence for that spectrum, said an official.

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ICRA ESTIMATES PRICING UPTICKS TO DRIVE 6% ON-YEAR GROWTH IN TELECOM SECTOR REVENUE IN FY20

The beleaguered telecoms industry is likely to recover its stride by way of a modest pricing increase in FY20, which in turn is slated to trigger some growth in sectoral revenue after three successive years of decline, rating agency, ICRA said. We expect minor improvements with (industry) revenues estimated to grow by 6% on-year and operating income or `Ebitda’ by 20% on-year in FY20, driven by benefits of higher data usage, and a relatively more consolidated and stabler industry structure, resulting in some pricing discipline, Harsh Jagnani, said. Trends of the last few months, he said, signal some recovery is in the offing with telco ARPUs (average revenue per user) showing signs of stabilisation, and incumbent operators – Bharti Airtel and Vodafone Idea -- looking for triggers of upward movement by recently implementing minimum recharge plans. Jagnani, however, said the envisaged sectoral revenue recovery in FY20 would still be significantly lower than the peak of FY2016 level. According to him, telecom industry revenues, which declined by 11% in FY18 to Rs 2.1 lakh-crore, is estimated to further decline by 7% in FY19. Telecom industry Ebitda too , he said, is estimated to reduce by 18% on-year in FY19, following a 21% erosion in FY18 (Rs 49,000 crore). The rating agency, however, said telcos would be bolstered by the planned deleveraging initiatives to the tune of Rs 0.9-1-lakh crore. The anticipated deleveraging, if it materialises, can improve the interest coverage to 1.4x and debt/EBITDA to 8x as on March 31, 2020, it added. However, ICRA estimates the debt metrics of the telecom industry to remain weak with interest coverage of 1.1x and debt/EBITDA of more than 11x as on March 31, 2019.

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CIBIL PUSHES BANKS FOR FASTER SUBMISSION OF CREDIT DATA

TransUnion Cibil is asking lenders to submit monthly credit data of borrowers quicker, a top official at the credit information bureau said. Lenders report credit data of their borrowers to the bureau after every month. Currently, the data is submitted and updated two weeks after the month end. We are working to make sure that the data gets sent to us faster and we want to make sure that data comes to us within a week of every month-end, instead of a fortnight at present, Harshala Chandorkar, said. She said that by and large, every lender submits data on a monthly basis and there are invariably some issues with the data set because some credit accounts would have been missed from being updated by banks and some also get rejected by the bureau because key input fields are missing. The bank works on the rejected data and then sends it back to us, she said. In 2015, Reserve Bank of India (RBI) directed all banks and non-banking financial companies (NBFCs) to become members of credit information companies (CICs) and share all credit data with them. CICs maintain data on borrowings and payment details on a monthly basis. This helps banks perform due diligence on borrowers before granting them loans and also weigh default risks. The central bank had also asked lenders to update credit information on a monthly basis or at shorter intervals mutually agreed upon between the lender and the CIC. Chandorkar said TransUnion Cibil has close to 4,000 institutions as members comprising banks, NBFCs, housing finance companies (HFCs) and credit card companies and covers over 99% of the lending in the regulated sector. These institutions contribute information on all loans and facilities they have granted, irrespective of the type or size of the loan. This gets refreshed every month to show the repayment history, said Chandorkar. Cibil has information on 900-950 million individual credit accounts, including repayment history; it also maintains information on 30-35 million non-individual credit accounts.

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FPIS INVEST RS 38,211 CRORE IN MARCH SO FAR

Foreign investors have poured in a net amount of Rs 38,211 crore in the domestic capital markets in March so far, mainly on account of improved global liquidity. In February, foreign portfolio investors (FPIs) had put in a net amount of Rs 11,182 crore in the capital markets - both debt and equity. Analysts attributed the increase in infusion to a shift in stance on monetary policy outlook by various central banks globally. According to depository data, foreign investors pumped in a net sum of Rs 27,424 crore in equities, while the debt market saw a net infusion of Rs 10,787 crore during March 1-22. Harsh Jain, the cooling of US-China trade war and no hike in interest rates by the US Fed has made India attractive to FPIs. Agencies

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NO SACRIFICE TOO BIG TO SAFEGUARD INTEREST OF JET AIRWAYS: NARESH GOYAL

Naresh Goyal, who is quitting as chairman of Jet Airways under a debt resolution plan, Monday said no sacrifice is too big for him to safeguard the interest of the airline and the families of its 22,000 employees. Goyal is also the founder of the full-service airline, which has been operating for more than 25 years. No sacrifice is too big for me to safeguard the interest of Jet Airways and the families of the 22,000 employees. For the sake of my family of 22,000 employees and their respective families, I have today taken the step of stepping down from the board of Jet Airways, he said in a statement issued by the airline. He became chairman of the company in April 1992. My family is behind me and with me in this decision and I hope you will support my decision too. I will miss you one and all, Goyal said.

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EXPECT BUYER FOR JET AIRWAYS BY MAY 31, SAYS SBI CHAIRMAN

State Bank of India (SBI) Monday said that it expects investors or buyer for the cash-strapped Jet Airways by the end of May and promoter Naresh Goyal has option of increasing his stake in the beleaguered airline to beyond 25 per cent in the future. Consortium of lender led by the SBI has agreed to put in Rs 1,500 crore immediate funding by acquiring 51 per cent stake in the company through issue of Rs 11.4 crore fresh shares. As a result, the stake of promoter Naresh Goyal will come down to 25 per cent from 50 per cent, while Abu Dhabi's Etihad Airways, which had a 24 per cent stake in the carrier, came down to 12 per cent. Bidding process to be initiated by lenders for sale to new investor(s), the process expected to be completed in June quarter as per the resolution plan. June is too late. My expectation is 31st May market is open for everyone whosoever wants to come in. There will be expression of interest which will be given by April 9 and binding bid by April 30, SBI Chairman Rajnish Kumar told. It could be financial investor, it could be airline including Naresh Goyal himself or Etihad. No body is barred from bidding or taking over the airline as per the rule, he said.

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DELIST ATTACHED PROPERTIES OF DSK DEVELOPERS: MAHARERA TO STATE GOVERNMENT

Shooting a letter to the state government, Maharashtra Real Estate Regulatory Authority (MahaRERA) recently pleaded the Home Department to delist the attached properties of DSK Developers. Several projects of the group have been reeling for years. A group of home buyers recently approached MahaRERA, requesting the projects of the group be revoked The reason, the letter states, is to accelerate the unfinished projects that have been reeling for years. MahaRERA informed the government that approximately 2,000 home buyers will be benefitted once the projects are passed on to a third party. The buyers have also said that they're looking for developers who will take over the incomplete project and if not private developers, following which MHADA will be roped in to complete the project. Over 170 home buyers — who had purchased DSK flats at Anandghan, Pune — informed MahaRERA that key people managing the project have been arrested for economic offences. Now, they want the authority to revoke the registration of the project under section 7 of the Act and, under section 8 of the same Act, should assign a third party to complete the project. Vasant Prabhu, has confirmed that the letter has been sent to the Home Department. Honkarpe also claimed that in the particular project, the home buyers had booked flats in December 2013 and promised possession by December 2016. However, the current problem is that about 45 per cent of work is done because it has being lying unattended for last two-and-a-half years. They're now finding a developer and if that doesn't work out, they want the government to ask MHADA to complete the project, he said. Gautam Chaterjee, also said that the state government has provisionally attached few lands and properties of DSK group. Keeping that in mind, the aim of MahaRERA is finish the project and quickly hand over the homes to at least 2,000 allottees.

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DEVELOPERS' BODY URGES TELANGANA GOVERNMENT TO PREPARE NEW PLAN FOR HYDERABAD

The Telangana Developers Association (TDA) has urged the state government to prepare a new master plan that suits the dynamics of the city especially keeping high growth of the city and migration. The association also asked the government to exempt mortgage rule to the buildings that were registered under Real Estate Regulatory Authority (RERA). TDA president GV Rao said at the TDA annual meet on Sunday that the development plan should give a new direction to suburban working and living. The government should rectify errors in the earlier master plan which include technical and human errors or some mismatches with ground realities. Even some aspects are missing to make Hyderabad a global city. The government should think on technology applications which were not available at the time earlier master plan preparation like three dimensional surveys, the TDA chief said. The TDA also suggested the planner should look into the high volumes of vehicle growth and ensuring healthy living through pollution control and environment protection. To control the density in core city, using different planning tools and concepts like large townships in the metropolitan region and beyond, he said. Since ORR growth corridor and grid roads rules hindering growth of the city especially abutting the ORR, the TDA president suggested some alternatives. Telangana chief secretary SK Joshi said the government was working on introducing ‘Ease of Construction' on the lines of Ease Of Doing Business (EODB) by implementing integrated application for various infrastructure projects with a time frame. He said builders and developers need not go to individual departments for clearances and No Objection Certificates (NOC). The chief secretary said the government has began the exercise on new master plan which was being prepared keeping special characters and requirements of the city. The plan would cover the entire metropolitan areas up to the proposed Regional Ring Road and it would have various sub-plans like settlement plan and education hub. Joshi said pedestrian and transport facilities would be given priority for the city while preparing the master plan. cities which take care of pedestrians are the most caring cities and of global standards, he said.

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FOR HOUSING FINANCE COMPANIES, FY20 LOOKS AS BAD AS FY19: ICRA REPORT

The liquidity crisis has crimped credit growth for housing finance companies (HFCs) and is unlikely to improve much in FY20, even as the weak external environment will put a pressure on asset quality, warns a report. HFCs are expected to report a 13-15% credit growth in FY19, which will inch up to 14-16% in next fiscal year, ratings agency Icra has said. Aggravating the difficulties will be a likely pressure on the asset quality front due to the weak operating environment, Icra said. Discussions with some HFCs reveals that their stock of repossessed assets has also increased, due to the lower saleability of those assets leading to an elongated recovery time, the report read. Gross non-performing assets (NPAs) of the home loan segment will increase to up to 1.3% in the medium term from the present 1% levels, the report stated. If we include project loans, their overall NPAs will shoot up to 1.8% in the medium term from the present 1.4%, it said. The ongoing troubles will result in a narrowing of margins and, accordingly, a moderation of profit levels to 14% levels in FY19 from 18% in the year-ago period, Icra said, adding it expects bottomline to be at the same levels in FY20 as well. It can be noted that the housing finance sector has been considered as one of the safest bets for financiers in the last few years, as the segment has been largely resilient. According to the ratings agency, key factors to monitor from credit quality perspective are home loans extended to borrowers where the underlying projects have been significantly delayed and under-construction properties sold by builders under subvention schemes or buyback/assured return schemes, its vice-president Supreeta Nijjar said. Following the September 2018 liquidity crisis triggered by IL&FS, with a slowdown in the HFCs' credit growth, banks have been quick to seize the opportunity, Icra said. The home loans portfolio for HFCs and other NBFCs came down to 13% from 18% in the year-ago period, while the overall housing credit outstanding growth also narrowed down to 16% from 18%, it said.

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LIC, SBI, BOB, PNB SEEK MORE TIME TO PRUNE STAKE IN UTI AMC

K Ram Kumar Four large shareholders of UTI Asset Management Company (UTI AMC) are hoping to get a relaxation in the time-frame from the Securities and Exchange Board of India (SEBI) for diluting their stakes in the mutual fund to 10 per cent each. State Bank of India (SBI), Life Insurance Corporation of India (LIC), Bank of Baroda (BOB) and Punjab National Bank (PNB) have to bring down their stake by March 31, according to the deadline set by the market regulator. They have made a plea to the regulator for leeway on this front, sources said. They are understood to have submitted a roadmap to bring down their stake in phases. The four shareholders — each having 18.24 per cent stake in UTI AMC — fear that if they try to sell 8.24 per cent each (collectively 32.96 per cent) in one-go, they may not be able to realise the full value of their investment. Hence, they are exploring the possibility of offloading their stakes in tranches. T Rowe Price International Ltd has 26 per cent stake in UTI AMC. In accordance with SEBI regulation on mutual funds, no sponsor of a mutual fund can directly or indirectly have 10 per cent or more of the shareholding (cross-holding) or voting rights in the AMC or the trustee company of any other mutual fund; also, it cannot have representation on the board of the AMC or the trustee company of any other mutual fund.

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ONLY 39% OF 79 LAKH PMAY HOMES BUILT SO FAR: REPORT

With only 39 per cent of the homes sanctioned under the Pradhan Mantri Awas Yojana built so far, completion of affordable housing projects under the PMAY has been slow, according to an Anarock report on Sunday. Progress under the PMAY has been slow. As of now, we're not looking at realistic completion of the targeted number of homes. As per the Ministry of Housing and Urban Affairs, out of the 79 lakh homes sanctioned under the PMAY so far, only around 39 per cent have either been completed or occupied, it said. The gap is too big to ignore, the report said. On new properties in the market, the report said supply of new housing units in the top seven cities in the country declined by 64 per cent in the last five years from 5.45 lakh units in 2014 to 1.95 lakh units in 2018. Housing sales also declined 28 per cent during the same period from 3.43 lakh units in 2014 to 2.48 units last year, it said.

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GOVT'S PERFORMANCE BELOW EXPECTATIONS ON JOBS, HEALTH CARE, AGRI: SURVEY

A voter survey by non-governmental organisation Association for Democratic Reforms suggested disappointment with the government’s performance on key issues, including jobs, providing healthcare and drinking water. All top-three priorities had an average rating of 2.15-2.55, indicating below average performance. Other priorities include better roads and public transport, agricultural issues, and law and order matters. The government fared poorly on these indicators as well. The government’s performance score on the top-10 voters’ priorities is below average. On Better Employment Opportunities, which is the topmost voters’ priority, the performance of the government has been rated as one of the worst (2.15 out of 5), the survey said. ‘Better Employment Opportunities’ as their biggest priority. A strong defence/military was a priority for 3.02 per cent of rural voters, while terrorism got 3.34 per cent. The percentage of urban voters who identified military issues and terrorism as key issues was 5.18 per cent and 4.1 per cent, respectively. Voters rated the government’s handling of both issues as below average. It is quite clear from the top-10 Voters’ Priorities that Indian voters prioritise employment and basic amenities (healthcare, drinking water, better roads, etc) above all governance issues (including terrorism and strong defence/military), said the report.

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NARESH GOYAL EXITS CRISIS-HIT JET AIRWAYS BOARD BUT ROOM OPEN FOR RETURN

Naresh Goyal’s reign at Jet Airways, the company he founded 25 years ago, ended on Monday as he stepped down as chairman of the board and transferred control to the lenders. The consortium of lenders, led by the State Bank of India, will now own a 50 per cent stake in the airline, while Goyal’s stake would be halved to 25.5 per cent. Abu Dhabi-based Etihad Airways would shed its shareholding to 12 per cent from 24 per cent earlier. The Jet board on Monday decided to allot 114 million shares to the lenders upon conversion of one rupee of its outstanding Rs 8,000-odd-crore debt and accepted the resignation of Goyal, his wife Anita and Etihad representative Kevin Knight. While former bureaucrat Ashok Chawla, who’s an independent director at Jet, chaired the board as an interim arrangement, Goyal joined the meeting through a video-conference from London, sources said. It was also decided that lenders would provide Rs 1,500 crore in emergency funding to the airline and would invite an expression of interest to find a new investor on April 9. While Goyal has signed a binding agreement with the lenders to reduce his shareholding to below 10 per cent once a new investor comes in, he’s free to participate in the bid process. The banks hope to conclude the deal by the end of May. A new chairman, possibly a banker, will be announced soon till a new investor takes charge, according to a person close to the development. But on Monday, some reports also said Air India Chairman Ashwani Lohani was in race to head Jet in the interim. A senior public sector bank executive said Goyal will pledge at least 16 per cent of his 25 per cent stake. Without this condition prospective bidders would not look at this firm, the executive said. The pledged 16 per cent stake of Goyal will also be available in auction. Thus, in effect, about 67 per cent equity of the firm will be available for prospective bidders for purchase. An interim management committee has been created to manage and monitor daily operations and cash flow, the airline said in a stock exchange notification. Goyal’s exit is on expected lines. The next steps are more critical and this includes the amount of equity infusion and quality of new board. It is critical to have a world-class board led by a chairman with proven credentials. Key strategic decisions are required now, said Kapil Kaul.

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NARESH GOYAL WRITES TO STAFF: IT'S NOT THE END OF JOURNEY, BUT START OF A BRAND NEW CHAPTER

Jet Airways founder Naresh Goyal, who along with his wife Anita, stepped down from the board Monday, said the decision is not the end of the journey but the start of a brand new chapter. Goyal has also resigned from the chairmanship of the 25-year-old airline. In an emotionally-charged letter to the 22,000-strong employees, Goyal also said the approval of the debt-recast plan will put the carrier on a sounder and sustainable financial footing. After weeks of speculations over the future of Jet, which has grounded over 80 planes due to financial woes, its board Monday approved a resolution plan formulated by a consortium of lenders led by SBI, who has now become the new owners of the airline with 51 percent equity holding. I'd like to humbly and with immense love and gratitude, inform you that both Anita and myself are stepping down from the board of Jet Airways with immediate effect. Our airline stands poised to turn the page, ready to fly out of the turbulence and soar into a bright new future, Goyal, who began his aviation journey as a travel agent, said in the letter. We've not come to this decision lightly but this is not the end of the journey, rather it is the start of a brand new chapter, Goyal exuded confidence. He said he has seen the airline growing from a fleet of just four aircraft flying to 12 routes in the first year, to a peak fleet of 124 flying to over 550 destinations. This has all been possible because of the tireless, unrelenting efforts of each and every one of the employee, tight-knit members of the Jet Airways family, he added. It has truly been a labour of love that Anita and I, together with all of you have built collectively with our blood, toil and tears. Looking back I wouldn't want to change a thing. Not the triumphs, nor the trials and tribulations, challenges nor sweat equity, Goyal said. For the past 25 years, Jet has been a way of life for Anita and me. Very few people are fortunate enough to live their dreams and we have been truly blessed to be one among those few, he said. I'd also like to take this moment, to acknowledge the contribution of my wife, confidant and partner Anita without whom this journey would just not have been possible, Goyal concluded.

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A NEW INVESTOR IS CRITICAL TO JET AIRWAYS’ FUTURE: CFO

The advent of a new investor is critical to Jet Airways’ future and survival, its finance chief said. For sure, Amit Agarwal said, when asked if the airline’s future depended on a new buyer. He spoke in the first instance of a senior Jet executive speaking on record on the situation at the airline and its future, since its troubles started last year. The bidding process and search for a new investor, slated to be implemented in the April-June quarter, cannot be impaired in any manner, he added. Agarwal’s stress on a new investor would be critical in ruling out speculation over current partner Etihad Airways or founder Naresh Goyal making a comeback in the bidding process. Goyal stepped down as the chairman and from the board on Monday. Etihad has communicated to Jet’s banks that it wanted to exit the local airline. Agarwal, however, said the bidding process would be nonrestrictive and both Goyal and Etihad could participate if they wanted. As always, Etihad continues to work closely with lenders, Jet management and key stakeholders to facilitate a solution for Jet Airways, Etihad said. Jet’s lenders are taking over a majority (50.1%) of the airline and plan to call for bids from prospective investors starting April 9. They aim to wrap up the process by June-end. Many eyes in the industry are on Tata Sons, the salt-to-software conglomerate that had initial discussions to buy a stake in Jet but then stepped back at the behest of the board. Sources, including people inside the conglomerate, said it was waiting for the right moment to bid. One of its conditions for buying a stake was the exit of Goyal. The Tata Group needs a network for Vistara, its 51:49 joint venture with Singapore Airlines. It has a second airline, AirAsia India, with the eponymous Malaysian low-fare carrier. Acquiring Jet Airways would give them a network that would, in the current capacity-addition plan, would take no less than five years, said an industry insider. A foreign carrier would need an Indian partner, as foreign airline ownership cannot go beyond 49%. Finding a right Indian partner is the trickiest part for a foreign airline, said a foreign airline executive, who did not want to be identified.

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TO CURB FAKE NEWS, WHATSAPP SET TO ADD TWO NEW FEATURES

In a bid to curb fake news, Facebook-owned company WhatsApp had introduced the ‘Forwarding’ feature to sent forwarded message to others. Now the social-media giant is testing two new updates to improve the message sending feature. WhatsApp is likely to add two new features- Forwarding Info and Frequently Forwarded Both the features are under development. The Forwarding Info feature is likely to release in the next beta updates.

Forwarding Info

The Forwarding Info feature will help people to know about how many times a message has been forwarded or sent. One can get the idea about the information after visiting the Message Info section of the WhatsApp.

Frequently Forwarded

As of now, when we forward a message or a photo in WhatsApp, we get the label of forwarded above message text. In a new feature, when a message gets forwarded for more than four times, the WhatsApp will display the Frequently Forwarded label on the top of the message. The freeware and cross-platform messaging app had put a global limit on forwarded messages to five people. This was done to ensure users that what they were reading or seeing, is not a composed one from their relatives, friend but forwarded from someone else. The Forwarding Info and Frequently Forwarded are likely to be a part of WhatsApp Android beta version 2.19.80.

#For Source of Information copy and paste the heading in google.

Thanks & Regards,
CS Meetesh Shiroya

Corporate Updates

Tuesday 26 March 2019

CORPORATE UPDATES 26.03.2019

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