CORPORATE AFFAIRS
MINISTRY RAISES A RED FLAG OVER BANKS’ IMPROPER LOAN DISBURSEMENTS
In
a bid to curb improper loan disbursements which might lead to a sudden spike in
non-performing assets of banks in future, the Ministry of Corporate Affairs
(MCA) has raised concerns over the role of bankers and sought tighter
regulatory oversight. Sources told that the MCA has raised a red flag to the
Finance Ministry over the role of bankers in loan disbursement The MCA has
approached the Finance Ministry urging tighter regulatory oversight on bankers,
the sources said. The MCA had done an internal analysis of cases which are
under the Insolvency and Bankruptcy Code (IBC) process. As per the analysis,
the MCA has found irregular transactions of over Rs 1 lakh crore in 215
companies where corporate insolvency resolution processes is going under the
IBC process. MCA also said that bankers have been negligent in the past while
disbursing loans and monitoring the end use. These irregular transactions could
have been avoided if bankers had adhered to strong risk management norms and
monitored the end utilisation of loans, the sources pointed out. The irregular
transactions include fund diversions, dealings with shell companies, among
others. MCA has urged the Finance Ministry to ensure that banks follow stronger
risk management norms, vigilant loan administration and careful monitoring of
end utilisation of sanctioned loans. According to the IBC report card, 53
percent of corporate insolvency processes have been completed in the
January-March quarter of FY 2019. As many as 359 cases had been admitted for
corporate insolvency, while only 14 got resolution plan approvals and 73 went
into liquidation in the January-March quarter.
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LENDERS TAKE 57%
HAIRCUT IN 94 CASES WORTH RS 1.75 LAKH CRORE
Banks
have taken a huge 57 percent haircut in the 94 large accounts worth Rs 1.75
lakh crore which were resolved in FY19, recovering just Rs 75,000 crore or only
43 percent of the admitted claims, finds a report. The numbers assume
importance as the bankruptcy law enters the third year this month. As of March,
there were 1,143 cases pending at various bankruptcy tribunals, and 32 percent
of them are pending for over 270 days. The average resolution timeline for these
94 cases resolved was 324 days as against the stipulated timeline of 270 days.
Only 94 stressed with a total claim of Rs 1,75,000 crore by financial creditors
were resolved in FY19 with a recovery of Rs 75,000 crore or 43 percent of the
admitted claims under the insolvency process approved by the various national
company law tribunals (NCLTs), say a joint study by Crisil and industry lobby
Assocham released Friday. The report said had these 94 companies were
liquidated, the recovery would have been just 22 percent which is significantly
lower than the recovery rate through normal resolution process. The report
further said there are a few big-ticket accounts for which resolution has not
been finalised for over 400 days as IBC framework is still a work in progress.
According to the study, some of the key issues that need to be addressed for
successful implementation of IBC are adherence to timelines, adequate judicial
infrastructure, creditor classification and prioritising, among others. To
maximise value and stakeholders' interest, the IBC framework for liquidation
under a going concern basis needs to be explored further and should be followed
in true spirit, the report said.
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MORATORIUM INAPPLICABLE
TO THIRD PARTY GOODS WITH CORPORATE DEBTOR: NCLT
The
applicability of moratorium over third party assets in possession of the
corporate debtor was disputed before the Chandigarh Bench of NCLT. The Bench
ruled, in certain types of cases, when such assets are owned by third parties they
will not be struck by the moratorium The application was filed by Sun
Pharmaceutical Industries in the case of Parabolic Drugs (erstwhile Ranbaxy)
which has been under insolvency since August 30, 2018. The insolvency was
triggered by an operational creditor, Weather Makers. As part of the
arrangement between Sun Pharma and Parabolic, Parabolic would use the raw
materials supplied by Sun Pharma only for the purpose of production of a
particular product. The raw material in question was a chemical. The said
product was not delivered to Sun Pharma and upon initiation of insolvency, Sun
Pharma was not allowed access to the raw materials either. During CIRP, the
electricity was also cut off for Parabolic. In this backdrop, Sun Pharma argued
that the raw materials being chemicals, would get perished and should,
therefore, be returned. The creditors’ committee of Parabolic, however, voted
against this decision in view of the moratorium applicable during the period of
insolvency. While Section 14(1)(d) of the IBC prohibits recovery of any
property by the owner, in possession of the corporate debtor, it does not state
what such property comprises of. Section 3(27) mentions that property will
include – money, goods, land, actionable claim, etc. On the other hand, Section
18 of the IBC requires the resolution professional to take control and custody
over the assets of the corporate debtor. For the purposes of Section 18 only,
however, assets owned by third parties in possession of the corporate debtor
are not included. This implies that the resolution professional is not required
to take ‘control and custody’ over assets in possession of the corporate
debtor, which belong to third parties. The question before the NCLT was whether
the raw materials in question supplied by Sun Pharma to Parabolic would be covered
by the moratorium under Section 14 or the assets covered under Section 18. To
settle this apparent conflict between the two provisions, the Bench held that
Section 18 acts as an exception to the rule laid down in Section 14. The Bench
found that while Section 14 imposes a moratorium on property belonging to third
parties in possession of the corporate debtor, which includes ‘goods’, Section
18 carves out a particular exception for two kinds of assets
(i)
a trust asset or
(ii)
an asset in possession owing to a contractual arrangement.
It
further concluded that the arrangement in question was a contractual one and
therefore, the raw material was to be returned to Sun Pharma.
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IBC RESULTED IN RECOVERY RATE OF 43%, FIGURE IS RESPECTABLE:
CRISIL
The advent of Insolvency
and Bankruptcy Code (IBC) has resulted in a recovery rate of 43 per cent which,
according to rating agency CRISIL, is respectable. As on March 31 of this year,
the resolution plan for 94 stressed assets was approved by the National Company
Law Tribunal (NCLT). For this set of 94 accounts, resolution has been reached
for Rs 75,000 crore out of Rs 1.75 trillion total claim of financial creditors
admitted. That makes for a respectable recovery rate of 43 per cent, said a
knowledge paper prepared by industry body ASSOCHAM and rating agency CRISIL.
Also, post-implementation of the IBC, CRISIL estimates the banking sector’s
gross NPA (aggregate) dropped to 10% in March 2019 from 11.5% at the end of
fiscal 2018, it said, adding that India’s resolving insolvency score improved
to 40.8 in 2019 from 32.6 in 2016 after the IBC. The IBC regime also improved
India’s ease of doing business’ ranking to 77 in 2019 from 130 in 2017.
However, the IBC is a work-in-progress and despite two amendments brought
forward, challenges remain, with the major one being adherence to the IBC timeline.
Of the 1,858 cases admitted in the NCLT under the IBC, 1,143 cases were
outstanding as on March 31, 2019. Of these outstanding ones, 32 per cent had
surpassed the stipulated 270-day resolution timeline, the paper noted. Also,
there are a few big-ticket accounts for which resolution has not been finalised
for over 400 days, it said. Then, there are other challenges such as burden on
NCLT to resolve the large number of cases, clarity on priority of claims,
limited number of information utilities, liquidation at a ‘going concern’
level, and creation of a secondary asset market, which need to be addressed,
said CRISIL’s President-Ratings, Gurpreet Chhatwal.
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IRDAI CHIEF STRESSES ON NEED TO IMPROVE CORPORATE GOVERNANCE
The insurance regulator
called upon all companies to look at corporate governance standards to be fair,
transparent, trustworthy and financially sound. Companies should look at
corporate governance and related party transaction, Subhash Khuntia, said. Insurance
industry should provide stability if there is economic turmoil. While
expressing confidence that the insurance industry will not run into the kind of
problems faced by non-banking financial companies, which are battling massive
liquidity issues, the Irdai chairman asked insurers to classify exposure to
IL&FS as non-performing loans and make provisions. I suggest don’t be too
bothered about improving market share, said Khuntia. If growth is high, you
don’t have to bother about market share. Put your heads together to make the
market grow. He said that in the first year of liberalisation, India had just
five life and nine non-life insurance companies. Both the number rose to 15 in
the next four years. During the first five years, however, only three life and
13 non-life companies reported operating profit. You must remain financially
sustainable, said Khuntia. There are 24 life insurance companies and 34
non-life insurance companies. Last year, the overall rate of growth of premium
was 13%, higher than the economic growth of the country. Of the life insurance
companies, 21 reported operational profit compared to 25 in the nonlife sector.
The insurance regulator is working on establishing risk-based capital system, a
self-regulating mechanism where those who manage risk better will be allowed to
operate with lower capital. It is working on risk-based supervision and
introduction of IFRS (International Financial Reporting Standard) 17. I am not
in favour of unnecessary control but would like to have broad regulations, and
within that self-regulation on your part, said Khuntia. IFRS 17 has been
postponed to 2022 globally India has also postponed its introduction, but Irdai
needs the help and cooperation of insurers during the preparatory phase prior
to its introduction, said Khuntia.
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BAR COUNCIL ASKS BIG 4 NOT TO OFFER LEGAL SERVICES
The big four accountancy
firms may just have added one more name to their list of adversaries— Indian
law firms. That is because the Bar Council of Delhi has directed them not to
start offer legal services. The council’s directive — which follows a complaint
filed by Society of Indian Law Firms (SILF), the only representative body of
law firms in the country, against major audit and accounting firms practising
law — is in contrary to the stance taken by the corporate affairs ministry
(MCA). An expert panel constituted by the ministry had recommended that
Advocates Act be amended to allow audit firms to offer legal services. The bar
council had recently issued notices to EY, PwC, Deloitte and KPMG, seeking
details of all the lawyers they have hired in their firms. KPMG and Deloitte
have filed their reply to the notice, while EY and PWC have sought six weeks
and four weeks, respectively, to file their reply. The BCD (Bar Council of
Delhi) has asked the so-called Big Four to provide the list of lawyers who are
part of them in any capacity and still practising the law, said Lalit Bhasin.
SILF believes that audit and consulting firms are also providing legal services
in India, which is prohibited under the Advocates Act 1961. Bar council on
Thursday said the Big Four should refrain from providing any service that would
amount to practicing law. SILF had first complained to Delhi Bar Council about
alleged unauthorised practice of law by the Big Four in 2015. The council has
now written to the India head of all the four firms and has asked to represent
their views on the issue. The next hearing of the council would be held in
July. Industry insiders said Indian law firms were first wary of foreign law
firms entering the country, but that view has since mellowed as many large law
firms are now open to foreign investment. However, most of them view the Big
Four as a real threat as they could have huge impact on the way law firms
charge margins, an insider said. However, lately law firms have been venturing
in territories largely dominated by the Big Four, offering multi-disciplinary
practices (MDPs) such as forensic operations, undertaking commercial diligence
and investigation, and merger and acquisition (M&A) services, for their
clients. For instance, AZ&B Partners reportedly hired six forensic experts
from EY. While the Big Four continue to focus on revenues and work on smaller
margins, law firms have comparatively smaller top line but huge profit margins,
insiders said. The MCA expert panel had said the Advocates Act has to evolve.
For Indian firms to evolve into global leaders in auditing, legal, consultancy,
and ancillary services, it is necessary to rationalise the Advocate Act 1961 to
facilitate development of Indian audit firms as well as legal firms, its report
had said. Globally, Big Four offer full-scale legal services in some
geographies and ‘alternate legal services’ in others. In 2017, PwC launched ILC
legal in the US and Flexible Legal Resources for international clients.
Deloitte has entered legal services business in the UK and also acquired a US
legal firm. EY, too, has bought a legal services provider in US. In India, in
the past, legal notices have been issued to domestic arms of the Big Four for
hiring lawyers and operating surrogate law firms. The Indian affiliates of the
Big Four have hired lawyers by the hundreds to provide lowvalue legal and
documentation work, for which legal firms charge more.
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INDIA'S INSOLVENCY LAW AS CREATOR OF JOBS
The new corporate
insolvency regime has saved nearly four lakh jobs in India Had it not been for
the new law being enforced in December 2016, these jobs would have perished in
the tepid business environment and ballooning debt of corporate India. Under
the insolvency regime, a total of 88 cases have been resolved so far, securing
revenue of Rs 31,651 crore, with employee salaries of around Rs 2,350 crore. At
an estimated average salary of Rs 30,000 a month per person this translates to
a direct employment of 65,250. Then there are jobs of vendor partners, sales
outfits, housekeeping contracts, transporting contracts and security services.
Recent analyses by human resource firms show that one direct employee in a
company creates five more jobs outside. In the upcoming six months, with five
more headline cases set to be resolved, the impact on business and jobs in
India will be even higher. These five cases affect another 24,000-25,000 direct
jobs and over one lakh jobs as part of the ecosystem. In the boom years
2004-07, Indian businesses found cheap funding — local and overseas — in the
form of bank loans, bonds, convertible bonds and derivatives. They embarked on
ambitious expansion plans. By the time the global economic crisis hit in 2008,
India had turned into a domestic focused consumer economy, one that attracted
foreign investment. However, at the time, interest rates rose in tandem with
global demand weakening, and revenues were no longer commensurate with finance
costs. By 2014, a large part of the national indebtedness came from over
leveraged corporates, which impacted banks. The twin balance sheet problem
inexorably pushed the country towards the brink of credit ratings downgrade,
which would have made even small housing and car loans more expensive. Until
2016, measures taken to tackle corporate sickness had failed. These included
Board for Industrial and Financial Reconstruction (BIFR) under Sica (Sick
Industrial Companies Act 1985), Sarfaesi and various RBI-framed restructuring
schemes like Joint Lenders Forum. Cases lingered on for decades and the
legislations acted as a shield against accountability. Who was hit? The common
worker. In companies like Jet Airways, employees went months without salary
payments and eventually lost their jobs. The Insolvency and Bankruptcy Code
(IBC) of 2016 reversed the restructuring regime in three key ways. First, it
took control from the promoters and handed it to creditors assisted by
resolution professionals and qualified individuals, whose key role was to
ensure the businesses keep running and salaries are paid at priority. Second,
it created a forum to rationalise debt so that growth can be restored. Third, insolvency
proceedings got a court-approved buyer for failing assets who could fund growth
and successfully run these businesses. In some cases, it brought fresh foreign
investment. It is a resolution, not recovery, process, so, the IBC was designed
to support the hardworking Indian citizen. It also created a fresh set of
professionals in the cadres, expediting the move from promoter-driven to
professionally-run businesses. Insolvency alone created around 4,000-5,000
jobs, with 1,000-plus registered resolution professionals. Initially, IBC was
tested. The cynics said this would be a mechanism to write debt off and give
control back to promoters. As time passed, iterations in the law ensured this
would not happen. By the end of a year, the law had struck fear in the hearts
of defaulting business owners. Bankers tell of a large number of regularised
accounts for fear that a default would trigger insolvency proceedings. Yet,
like all things new, IBC too has had its share of evolution. The results have
not been as speedy as initially set out, at a maximum of 270 days. There are
aspects that are yet to be clarified, as lead cases are still being argued in
the Supreme Court. Any newly enacted law takes three or four years to settle.
Even in the US, it took nearly a decade for bankruptcy law to take shape before
it became a speedy and efficient mechanism to resolve financial trouble. In
India, the learning curve has been shorter. As IBC evolves, it could become the
most potent instrument in driving good credit behaviour and ethical business
practices among borrowers, and proactive, responsible behaviour among lenders.
Obviously, that would be a boon for jobs, the economy and the nation.
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JAYPEE INFRA LENDERS,
HOME BUYERS VOTE AGAINST SURAKSHA REALTY’S BID
Debt-stressed
Jaypee Infratech’s financial creditors and home buyers have voted against the
bid of Mumbai-based Suraksha Realty, the only offer that was left in fray to
acquire the company. Both financial creditors and home buyers are now keenly
awaiting the impending ruling by the Allahabad bench of National Company Law
Tribunal (NCLT) on the extension to the insolvency proceedings beyond the
current deadline of May 6. If NCLT allows an extension to the process, the
Committee of Creditors (CoC) is likely to reopen the process and invite fresh
expression of interests that will allow all interested entities to participate
again, said the other person mentioned above. Of the total, 41.85% votes were
cast against Suraksha’s offer and 23.5% in favour. Of the 41.85% votes against
the offer, 39.64% votes were cast by financial creditors. Around 22%, of the
23.5% cast in favour of Suraksha’s bid, were by home buyers, showed a
regulatory filing by Jaypee Infratech. Large number of home buyers did not vote
and preferred to abstain Apart from Suraksha and NBCC, Adani Group also
recently showed interest in acquiring Jaypee Infratech. State-run NBCC has also
secured approvals from government for its revised bid, albeit after its bid was
rejected by lenders. Jaypee Infratech’s lead lender, has approached the
Allahabad bench of NCLT to seek this extension. The next hearing is scheduled
for May 6, which also happens to be the deadline to complete the insolvency
process for debt-hit realtor.
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NO BIDDERS YET FOR JET
AIRWAYS, STAFF CONSIDER BANKRUPTCY PROCEEDINGS
Potential
bidders for Jet Airways Ltd have so far failed to show any firm interest in
bailing out the struggling airline, a source involved in the matter said,
increasing the likelihood that the company will face bankruptcy proceedings Companies
that had submitted initial expressions of interest are not following up with
binding bids, said the source. A second source involved in the process said bidders
had until May 10 to come up with binding offers, a few days later than the
April 30 date indicated by lead lender State Bank of India (SBI) last month. Jet,
saddled with roughly $1.2 billion of bank debt, and SBI did not respond to
emails seeking comment. Employees of the company have said they have not been
paid for months and plan to take the airline to National Company Law Tribunal
(NCLT), a process allowed under Indian law. Right now we're more worried about
the bidding deadline, said a Jet Airways pilot. We will obviously have to take
it to NCLT and (go through) with the proceedings, he added.
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JET AIRWAYS MAY FLY
INTO INSOLVENCY AS BIDDERS STAY ELUSIVE
With
three of the four potential bidders so far failing to show any enthusiasm in
taking the Jet Airways deal forward, the airline is now left with no option but
to move towards insolvency. However, the lenders led by State Bank of India
(SBI) said they will wait until May 10 deadline for the submission of final
bids, before deciding on the next course of action. Etihad Airways, TPG Capital
and Indigo Partners are learned to have not signed the non-disclosure
agreements though it is necessary for conducting due diligence. Jet Airways is
as good as dead now. The clock was ticking for quite some time, said a source
from one of the lending banks. The bankers aware of the bidding process said
that the potential bidders have been wary of the Rs 13,000 crore negative
tangible worth of Jet Airways, and therefore, not sure whether they will be
able to make any profit out of it. However, one of the airlines which did not
participate in the EoI pegged the liability to be around Rs 25,000 crore. The
same source said that in case of the insolvency process, the banks are unlikely
to get much as airline business is mainly asset-light, and therefore, there is
nothing much to recover. Mark Martin, said the lenders have played a very sad
role in bringing Jet Airways to the situation it is in at present. There seems
to be no hope left now, said Martin.
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HOME TRUTHS HIT BUYERS
AS AMRAPALI PROBE FINDINGS GO FROM BIZARRE TO SHOCKING
The
findings being brought to light by the forensic investigators looking into
Amrapali Group's misdeeds are going from bizarre to outright shocking It has
now come to light that the company's promoters and directors built personal
empires using money received from homebuyers — without spending even a single
penny of their own. Deposits taken from aspiring homebuyers were spent by these
persons on a wedding, luxury cars, houses, jewellery and other such stuff, a
ToI story quoted forensic auditors as saying. With this money, they also made
investments in shares and mutual funds. The most damning of these revelations
is the finding that money taken from buyers was sufficient to complete all of
Amrapali's promised homes, but that blatant siphoning off doomed its projects. The
audit report, which runs into more than 2,500 pages, gives a shocking account
of how over Rs 3,500 crore of homebuyers’ money was diverted to wherever the
group bosses wished. It was filed after auditing as many as 46 registered
Amrapali entities and many more shell companies that the group had floated.
Anil Sharma ran Amrapali Group like a personal fiefdom in cahoots with other
directors, auditors have informed the Supreme Court. Auditors Pawan Agarwal and
Ravi Bhatia told the SC they've detected an amount of Rs 152.24 crore which
Amrapali's director and their families diverted for paying taxes, advances for
buying shares and other such expenses. According to the auditors, it is
possible to raise the money required for finishing the stuck projects. For
this, they recommend that the money diverted by the group's bosses be brought
back and further funds be raised by selling the groups various assets,
including homes. As per their account, the total recoverable amount from
Amrapali would be in the neighbourhood of Rs 9,590 crore. As much as Rs 455
crore can be recovered from the group's directors, their kith and kin and
individuals holding hey managerial position in the company, the auditors have
told the SC. Besides, at current market value, Rs 321.31 crore can be recovered
from 5,856 flats that Amrapali had sold at throwaway prices. From homebuyers
who have either booked flats or already taken possession in as many as 14
projects of the group, an amount of Rs 3,487 crore can be recovered. That
apart, there currently are 5,229 unsold flats of Amrapali in 11 different
projects which can be sold for Rs 1,958.82 crore, the auditors' account
reveals. The account put bogus purchases in the group's projects at Rs 1,446.68
crore. Also, the group has a liability of Rs 6,004.6 crore towards the Noida
and Greater Noida authority on account of unpaid money due for land.
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UPDATE ON MCA
INSPECTION - MCA FINDS NO IRREGULARITIES AND NO FURTHER ACTION PENDING
PERTAINING TO VAKRANGEE
Vakrangee
Ltd. announced that it has received an update on the Inspection report from
Ministry of Corporate Affairs which clearly states that pursuant to Inspection
of Books of Accounts of the company for the last three years there are no
irregularities and there is no further action pending pertaining to it with
respect to the below mentioned matters. The Ministry of Corporate affairs (MCA)
had ordered the Inspection of Books of Accounts for a period of three financial
years to be conducted in terms of Section 206(5) of the Companies Act 2013. The
scope, inter alia, included:- Resignation of Price Water House and Co Chartered
Accountants LLP as Statutory Auditors of the Company Abnormal trading of the
Company stock and consequent action taken by the Stock Exchanges Income Tax
Assessment order and Tax Audit report for the last 5 years Shareholding
structure of the Company The Ministry of Corporate Affairs finds no
irregularities and there is no further action pending pertaining to Vakrangee
with respect to the above mentioned matters. The MCA has however asked for
certain routine explanatory information regarding the Amount collected from the
Franchisees and with regard to disclosure requirement of Other Assets &
Liabilities.
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HOME TRUTHS HIT BUYERS
AS AMRAPALI PROBE FINDINGS GO FROM BIZARRE TO SHOCKING
The
findings being brought to light by the forensic investigators looking into
Amrapali Group's misdeeds are going from bizarre to outright shocking. It has
now come to light that the company's promoters and directors built personal
empires using money received from homebuyers — without spending even a single
penny of their own. Deposits taken from aspiring homebuyers were spent by these
persons on a wedding, luxury cars, houses, jewellery and other such stuff. With
this money, they also made investments in shares and mutual funds. The most
damning of these revelations is the finding that money taken from buyers was
sufficient to complete all of Amrapali's promised homes, but that blatant
siphoning off doomed most of them. The audit report, which runs into more than
2,500 pages, gives a shocking account of how over Rs 3,500 crore of homebuyers’
money was diverted to wherever the group bosses wished. It was filed after
auditing as many as 46 registered Amrapali entities and many more shell
companies that the group had floated. Anil Sharma ran Amrapali Group like a
personal fiefdom in cahoots with other directors, auditors have informed the
Supreme Court. Pawan Agarwal and Ravi Bhatia told the SC they've detected an
amount of Rs 152.24 crore which Amrapali's director and their families diverted
for paying taxes, advances for buying shares and other such expenses. According
to the auditors, it is possible to raise the money required for finishing the
stuck Amrapali projects. For this, they recommend that the money diverted by
the group's bosses be brought back and further funds be raised by selling the
group's various assets, including homes. As per their account, the total
recoverable amount from Amrapali would be in the neighbourhood of Rs 9,590
crore. As much as Rs 455 crore can be recovered from the group's directors,
their kith and kin and individuals holding key managerial position in the
company, the auditors have told the SC. Besides, at current market value, Rs
321.31 crore can be recovered from 5,856 flats that Amrapali had sold at
throwaway prices. From homebuyers who have either booked flats or already taken
possession in as many as 14 projects of the group, an amount of Rs 3,487 crore
can be recovered. That apart, there currently are 5,229 unsold flats of
Amrapali in 11 different projects which can be sold for Rs 1,958.82 crore, the
auditors' account revealed. The account put bogus purchases in the group's
projects at Rs 1,446.68 crore. Also, the group has a liability of Rs 6,004.6
crore towards the Noida and Greater Noida authority on account of unpaid money
due for land.
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INSURE COMPANIES ASKED
TO MAKE PROVISIONS FOR IL&FS, RCAP DEFAULTS
Insurance
companies, like banks, will have to provision for their exposure to the
cash-strapped IL&FS group and the two downgraded Reliance Capital
subsidiaries, said the sector's regulator Friday. The Insurance Regulatory and
Development Authority (IRDAI) said insurers with exposure to Reliance Home
Finance and Reliance Commercial Finance will have to make provisions for debt
of these companies downgraded by Care Ratings last month. The National Company
Law Appellate Tribunal (NCLAT) allowed Thursday banks to declare their
defaulting accounts of IL&FS (Infrastructure Leasing & Financial
Services) and its group companies as NPAs. Yes, insurance companies will have
to make full provisions for the defaulting accounts of IL&FS, SC Khuntia
told. Some insurers have already made adequate provisions for all non-standard
accounts of IL&FS, he said. Khuntia flagged concerns on corporate
governance at insurance companies and asked them to look into such issues to
ensure fairness and transparency. I have asked insurers to be careful about
related party transactions. It has to be at arm's length, he said. We have seen
what kind of turmoil has happened in the NBFC sector but I am confident that
insurance industry will not have that kind of a problem. In fact, insurers are
meant to provide stability in times of economic turmoil, he said.
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GMR RAJAHMUNDRY ENERGY
EXECUTES BANK-LED RESOLUTION
In
a major development post Supreme Court's declaration of the RBI circular on
NPAs as ultra vires, GMR Infrastructure on Friday announced the successful
execution of the resolution plan between its associate company, GMR Rajahmundry
Energy and it lenders. The existing debt of the company has been brought down
to a sustainable debt of Rs 1,412 crore from 2,353 crore, GMR Infrastructure
said in a statement. Against above sustainable debt of Rs 1,412 crore, GMR
Group has already infused an amount of Rs 395 crore towards meeting 20 per cent
of principal towards repayment of the sustainable debt and the interest
servicing obligations of GREL for the first year, it said. This leaves balance
outstanding sustainable debt of Rs 1,130 crore carrying a floating rate of 9
per cent p.a repayable over 20 years. The balance debt of Rs 941 crore has been
converted into Long Dated Cumulative Redeemable Preference Shares (CRPS)
carrying 0.1 per cent which is repayable from 17th to the 20th year, according
to the company. Grandhi Kiran Kumar, said: The first-of-its-kind resolution
plan offers a mutually beneficial resolution for both lenders and the company
through a long-term solution for the existing debt and related obligations of
the group.
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RBI SLAPS RS 11 LAKH
FINE ON YES BANK FOR VIOLATING MONEY TRANSFER NORMS
Yes
Bank Friday said the Reserve Bank of India has imposed a penalty of Rs 11.25
lakh on it for violating money transfer norms (The) Reserve Bank of India (RBI)
vide its speaking order dates April 22, 2019, imposed a penalty of Rs 11,25,000
under the Payment and Settlement Systems Act, 2007, Yes bank said in a
regulatory filing. The RBI has identified certain violations of its circular of
2011 on Domestic Money Transfer - Relaxations and master directions issued in
October 2017 on issuance and operation of prepaid payment instruments in
connection with certain product features for an open loop prepaid card
(co-branded) previously issued by the bank, Yes Bank said. The bank said it had
launched this product as a pilot programme from September 13, 2017, and, later,
discontinued this product with effect from March 14, 2018, it said.
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RBI APPROVES TENURE
EXTENSION OF YES BANK'S PART-TIME CHAIRMAN BRAHM DUTT TILL JANUARY 2022
The
RBI has approved extension of tenure of Yes Bank's part-time chairman Brahm
Dutt till January 10, 2022, the private sector lender said Thursday. The tenure
of Dutt, whose appointment was approved in January this year by the RBI, was
till July 4, 2020. We are pleased to inform you that RBI vide its letter dated
May 2, 2019 has accorded its approval for extension of tenure of Brahm Dutt as
Part-Time Chairman of the Bank till January 10, 2022, the bank said in a
regulatory filing.
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LENDERS TO ANIL AMBANI’S RCOM FACE STEEP HAIRCUT
Lenders to Anil Ambani’s
Reliance Communications (RCom), Reliance Telecom and Reliance Infratel are finalising
plans to recover their loans of Rs 45,000 crore to the beleaguered companies,
although they concede that it will be a tough task given that significant value
has been eroded. Banks have decided to shortlist a resolution professional from
a field of 15 players after NCLAT allowed resumption of insolvency resolution
action against RCom. In addition, other issues on loans related to the
flamboyant businessman’s failed telecom ventures are expected to be taken up by
banks, including some of the Chinese lenders who have an exposure. The junior
Ambani’s businesses are under severe financial distress with lenders earlier
referring Reliance Naval too for action under the Insolvency & Bankruptcy
Code. In fact, a failed attempt by SBI to bail out RCom has delayed the action,
which many lenders believe further impaired the asset, leaving little on the
table for a potential buyer. The intense competition between Reliance Jio,
Airtel and Vodafone Idea has already made the sector unviable for more players,
given that revenues are falling with realisations dropping. Even if we find a
buyer, we will have to take a huge haircut, said an executive with a public
sector bank. The company has a fibre network, towers and spectrum and its
attempts to sell assets to realise value has yielded no results. The insolvency
plea had been moved by supplier Ericsson for unpaid dues, which had been stayed
by NCLAT. Subsequently, the Swedish equipment vendor moved the Supreme Court as
RCom went back on its promise on payment. Anil Ambani had to be bailed out by
his elder brother and Reliance Industries chairman Mukesh Ambani to make the
payment. But with the insolvency proceedings commencing, lenders sense an
opportunity to realise some value from the remaining assets. Banks will have
the first right over the value generated through the sale The law provides a
180-day window for the resolution process to go through, which can be extended
by another 90 days. In case the process fails to yield a desired resolution
plan, the company will be forced to go into liquidation.
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CO-LOCATION CASE: 3 NSE OFFICIALS MOVE SAT FOR STAY ORDER ON
SEBI BAN
Three senior executives of
National Stock Exchange (NSE) have moved the Securities Appellate Tribunal (SAT)
seeking a stay order on the ban imposed by market regulator Sebi on them in the
co-location case. The tribunal will hear the case on Monday, said a lawyer
representing the officials. Three senior executives of National Stock Exchange
(NSE) have moved the Securities Appellate Tribunal (SAT) seeking a stay order
on the ban imposed by market regulator Sebi on them in the co-location case.
The tribunal will hear the case on Monday, said a lawyer representing the
officials. Appeals are on behalf of three employees of NSE, Mr. Deviprasad
Singh, Mr. Ravi Varanasi and Mr. Nagendra Kumar SRVS seeking a stay order on
the Sebi ban, said Vikram Trivedi, managing partner of Manilal Kher Ambalal
& Co,whose law firm is representing them before the tribunal. We have filed
three appeals on Friday at the SAT. The matters were mentioned today and will
be taken up on Monday. The Securities and Exchange Board of India on Tuesday
said Ravi Varanasi, head of business development, Nagendra Kumar SRVS, head of
membership department and Deviprasad Singh, head of colocation support, were
guilty of colluding with two stock brokers — Way2Wealth Brokers and GKN
Securities — to give them an unfair advantage over the rest of the market by
way of faster access to the price feed on the bourse. The regulator has barred
the three officials from holding any position with any stock exchange, clearing
corporation, depository and any intermediary registered with Sebi for two
years. Varanasi has been barred from holding a position with a listed company
for three years. None of the employees have been attending office following the
Sebi ban. NSE has also withdrawn its legal support to all these employees. The
NSE board, which met on Friday, discussed the Sebi order and decided to meet
soon to decide on its future course of action. Three brokers — Way2Wealth
Brokers,GKN Securities and OPG Securities — against whom Sebi has taken action
in the colocation case has moved SAT challenging its order. Way2Wealth and GKN
Securities were allowed to have a direct connection between their servers
placed in the colocation racks at the NSE. NSE co-location facility allows
stock brokers to take on rent specific racks and co-locate their servers and
systems within the exchange premises, in order to have a low latency connection
to the exchange. The servers and systems placed in these racks would receive
the live market data feed disseminated by the exchange, process the data, and
accordingly place their orders to the exchange, Sebi said. Both the stock
brokers used the services of telecom service provider Sampark Infotainment,
which was not authorised by the NSE for such work. When other brokers sought
permission from the stock exchange to use the same facility offered by Sampark,
they were not allowed. However, in this case it is noticed that immediately
after allowing W2W and GKN to install direct connectivity to their racks, when
similar requests were made by Millennium and Mansukh, they were promptly denied
on the ground of lack of duct space, Sebi said. The regulator said Varanasi was
guilty of allowing preferential treatment to the two brokers as they were
allowed to avail Sampark's connectivity despite Sampark not having a licence.
In a separate order, Sebi has also found Suprabhat Lala, an assistant
vice-president at the stock exchange guilty of colluding with noted academic
Ajay Shah, and Infotech Financial Services, in which Lala's wife Sunita Thomas
is a director, sharing confidential information in course of his employment at
NSE.
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NSE CO-LOCATION CASE:
SEBI PARTIALLY RELAXES ORDER AGAINST OPG SECURITIES, 3 DIRECTORS
Sebi
on Friday partially relaxed the order against OPG Securities and three
directors in co-location facility case by allowing the stock broker to close open
positions in the F&O and currency derivatives segments within two months. On
Tuesday, the Sebi had barred OPG Securities and its three directors from
markets for five years and asked them to disgorge illegal gains worth Rs 15.57
crore along with 12 per cent annual interest for gaining unfair advantage over
other trading members by connecting to secondary server on daily basis without
valid reasons in NSE's co-location facility. Following the order, it is
understood that OPG Securities is holding open positions in the futures and
options (F&O) and currency derivatives segments at the end of trading on
April 30, 2019, which need to be closed, the regulator said. Accordingly, the
directions issued vide the final order shall stand relaxed for the limited purpose
of allowing the noticees to close the open positions in the futures and options
and currency derivatives segments of OPG Securities Pvt Ltd on or before the
expiry date of the respective contracts or within a period of two months from
April 30, 2019, whichever is earlier, the Sebi said.
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SCORES VIOLATION: SEBI
FINES BHILAI ENGINEERING CORPORATION RS 1 LAKH
Sebi
has fined Bhilai Engineering Corporation Ltd for failing to obtain SCORES
authentication SCORES is the regulator's online platform designed to help
investors lodge their complaints against listed companies pertaining to the
securities market. The Securities and Exchange Board of India (Sebi) has imposed
a penalty of Rs 1 lakh on the firm, the regulator said in an order. The
regulator, through a circular in December 2014, had consolidated all the
similar circulars issued by it previously and directed all the companies, whose
securities were listed on stock exchanges, to obtain SCORES authentication within
the stipulated time. However, Bhilai Engineering failed to obtain SCORES
authentication within the stipulated timeline and thereby is liable for the
monetary penalty, Sebi said in an order dated April 30.
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SEBI’S DISGORGEMENT
ORDER ON NSE IS MUCH MORE THAN JUST A SLAP ON THE WRIST
The
way the cost of financial misconduct has been rising globally, a $158 million
fine may seem like loose change However, the Securities & Exchange Board of
India has delivered much more than a slap of the wrist with its disgorgement
order against the National Stock Exchange of India Ltd. over an algorithmic
trading scandal. Including five years of interest at 12 percent, the 6.25
billion-rupee penalty works out to 11 billion rupees, or about $158 million. That’s
a fraction of the $110 billion bill Bank of America Corp. and JPMorgan Chase
& Co. have run up between them in fines and settlements since 2008,
according to a tally maintained by Bloomberg Intelligence. Yet that figure is
only 5 percent of the revenue that the banks have garnered in the past 11
years. By contrast, what Sebi is asking the NSE to pay is more than a quarter
of its combined overall operating revenue for four years, after the regulator
ruled that a high-frequency trading firm benefited from unfair market access.
It’s also more than whatever money the exchange made from HFT until changing
its system in 2014. This is overkill, especially since the regulator couldn’t
establish the graver charges of fraud or unfair trade practice. It all boiled
down to whether the technology used by the NSE to roll out its high-frequency
business provided an equal and fair trading environment to everyone who had
opted to place their computers close to the exchange’s, hoping to pare microseconds
when executing trades. When I wrote about the scandal two years ago, the
contents of a forensic study by Deloitte Touche Tohmatsu had just leaked. It
pointed out that until 2014, when the NSE shifted to broadcasting price
information simultaneously to all traders, it was giving those first to log in
an advantage without randomizing the benefit. Additionally, there was a lightly
used backup server, which OPG Securities Pvt. was consistently connecting to
before anyone else between December 2012 and April 2014. Further analysis
failed to unearth a scam of any size, however. In a separate order, Sebi
slapped a fine of roughly $2 million plus interest on OPG, assessing that to be
the unlawful profit from unreasonable use of the backup server. As for NSE’s
failure to ensure an equal and fair trading environment, Sebi has also asked
two of the exchange’s previous CEOs — Ravi Narain and Chitra Ramkrishna — to
give up a part of the pay they earned in the top job between 2010 and 2014.
They won’t be able to work for a market intermediary, a stock exchange or a
listed company for five years. Vikram Limaye should be reasonably happy,
though. The fact that the the NSE wasn’t found guilty of intentionally running
a rigged high-frequency market lifts the cloud hanging over its credibility.
The order paves the way for the exchange’s long-delayed IPO after a six-month
moratorium during which it won’t be allowed to access the securities markets. Besides,
the penalty — harsh as it is — won’t have any cash-flow implications. Even as
it was taking its time investigating, the regulator had asked the NSE to set
aside its co-location revenue. By March 2018, the escrow account had already
swelled to about 12 billion rupees. After paying the fine, Limaye will have
more cash at his disposal. But since the exchange hasn’t made any provisions
for the fine, it will have to take a charge, perhaps as early as the June
quarter. Internal processes have already become more robust, but the bigger
impact of Sebi’s order may be on NSE’s culture. The company achieved dominance
in a short time, leaving its much older rival, the Bombay Stock Exchange, in
the dust. The hubris that engendered needs to be tempered with some humility.
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DOLLAR SWAP AUCTION BOOSTS FOREX RESERVES BY $4.7 BN TO $418.5
BN
The country's foreign
exchange reserves soared by $4.368 billion to $418.515 billion in the week to
April 26, helped by the second dollar-rupee swap auction, RBI data showed
Friday. In the swap auction conducted on April 23, the Reserve Bank had
received bids worth $18.65 billion against $5 billion on offer. It accepted
just five bids worth $5 billion. In the reporting week, foreign currency
assets, which are a major component of the overall reserves, rose by $4.387
billion to $390.421 billion. Gold reserves remained unchanged at $23.303
billion, according to the data. The special drawing rights with the
International Monetary Fund was down by $5.9 million to $1.449 billion. The
country's reserve position with the Fund also declined $13.6 million to $3.341
billion, the according to the Reserve Bank.
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GRUH FINANCE SEEKS SHAREHOLDERS NOD ON JUNE 4 FOR MERGER WITH
BANDHAN BANK
Gruh Finance Ltd has sought
shareholders' approval on June 4 for the proposed amalgamation with Bandhan
Bank through a share swap deal. Gruh Finance's parent company HDFC has received
RBI approval to hold 9.9 per cent in the merged entity from the earlier
proposed 14.9 per cent. HDFC holds 57 per cent in Gruh Finance at present,
which has to be adjusted to make way for the 9.9 per cent stake in the merged
entity, after the RBI nod, sources involved in the deal told. Pursuant to an
order dated 10th day of April 2019 passed by the NCLT Ahmedabad Bench convened
meetings to be held on 4th June, 2019, Gruh Finance said in an exchange filing.
Approval of creditors, bond holders and deposit holders of the company will
also be sought on June 4, it said.
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RUPEE MAINTAINS FORM,
SPURTS 15 PAISE TO 69.22 VS DOLLAR ON SLIDING OIL PRICES
Rising
for the fourth straight session, the rupee strengthened by 15 paise to close at
69.22 against the US dollar Friday, bolstered by easing crude oil prices.
However, fresh foreign fund outflows and subdued sentiment at the domestic
equity markets capped the gains, forex traders said. At the interbank foreign
exchange market, the domestic unit opened flat at 69.38 and advanced to a high
of 69.20 during the day. It finally settled at 69.22, showing a rise of 15
paise over its previous close. During the week, the rupee climbed 80 paise.
This is the second consecutive week of gain for the domestic currency. The
Indian rupee has appreciated more than a percent in the last week. Indian rupee
is the best performing emerging market currency in last five days, said Sunil
Sharma. Brent crude futures, the global oil benchmark, fell 0.27 per cent to
USD 70.56 per barrel. Meanwhile, foreign institutional investors (FIIs) pulled
out Rs 400.68 crore on a net basis Friday, provisional data showed. The dollar
index, which gauges the greenback's strength against a basket of six
currencies, rose 0.16 per cent to 97.99.
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RERA IMPACT:
CONSTRUCTION TIME DOWN TO SIX MONTHS
The
Real Estate Regulation and Development Act (RERA) has, since its enforcement, significantly
reduced the average time taken for construction up to the first floor slab to
six months as per a report by Liases Foras. Data for 41 cities shows the
average time taken to complete construction up to the first floor from the
launch of a housing/real estate project has dropped since the implementation of
RERA. The average time taken to complete up to the first floor of the project
launch used to be 21 months. Among tier-I cities, Mumbai Metropolitan Region
witnessed the maximum drop (of 63 percent) in the median time frame (from 15
months to five months); while Chennai witnessed minimum drop (that being 27
percent) from 10 months to seven months, between 2016 and 2018. In NCR, the
average time came down to eight months from 17 months. The report also notes
that the floor space construction has increased in the last three years. Data
from top-8 cities shows that the incremental floor space construction has
increased by 88 percent from 2016 and 235 percent from 2014. Builders have also
increased the pace of construction in many projects to avoid registering them
under RERA leading to a sudden jump in floor space construction in 2017, says
the report. The report also notes that increased accountability of developers
has given a boost to the cement sector as well. Cement is not just a major
material in building construction but also an indicator of growth in
construction and allied industries. Cement consumption has grown by 9 percent
between FY17-18. It is expected to grow at a rate of 8 percent in FY19. It
should be noted that housing and real estate contribute 65 percent of the
demand for cement.
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GUJRERA GIVES A SECOND
CHANCE TO DEFAULTING BUILDERS
Gujarat
Real Estate Regulatory Authority (GujRERA) has introduced a one-time Voluntary
Compliance Scheme (VCS-2019) for real estate promoters and developers who have failed
to file mandatory quarterly progress reports (QPR) for two consecutive
quarters. The introduction of the scheme is aimed at providing an opportunity
to defaulting realtors to regularise their QPR filing and save themselves from
prosecution under section 63 of RERA Act. The scheme shall remain into force
from May 1 to June 7. Under Real Estate (Regulation and Development) Act
(RERA), it is mandatory for all real estate developers to update the authority
every quarter about the physical and financial progress of their projects.
These quarterly returns are required to be filed online on the state regulator's
website. Failing to comply with this norm attracts penalty as well. According
to the state regulator's recent order, promoters failing to file QPRs for two
consecutive quarters, and effectively not reporting the project progress to the
authority for the period of six months, are prosecuted under section 63 of the
Act. There will not be any further prosecution of the defaulting promoter under
section 63 of the Act, after filing his QPR under this scheme, for the period
prior to 30 April 2019, the state regulatory authority said in its order. The
processing fees for availing the scheme ranges from Rs 50,000 to Rs 1,50,000
depending on the cost of the real estate project.
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BUILDING WITHOUT
OCCUPATION CERTIFICATE ASKED TO BE REGISTERED WITH MAHARERA
A
building of which construction was complete, but it hasn't received an
Occupation Certificate was considered as an ongoing project and was asked to be
registered with the Maharashtra Real Estate Regulatory Authority (MahaRERA).
The moment a project is registered all of its documents come into the public
domain, thus making the process in real estate transparent. The home buyers
also had refused to take possession citing that the building didn't have an
Occupation Certificate. Gautam Chaterjee, it was held in a complaint that in
spite of the building being completed in the year 2015 that is before the
commencement of Real Estate Regulatory Authority Act, the building hadn't
received the Occupation Certificate and hence it will be considered as an on
going project. Total 15 home buyers of a project named Prathmesh Harmony
located in Ulwe, Panvel, approached MahaRERA against the developer Ajit Singh
asking the authority to direct the developer to register the project. The home
buyer stated that they were allottees in the project and the construction was
completed prior to the coming into effect of the Real Estate (Regulation and
Development) Act 2016. But since the building had not obtained an Occupation
Certificate till date, the home buyers and other allottees didn't take
possession of the apartment. The complainants further stated that the project
required to be registered with MahaRERA the developer failed to so. Therefore
they prayed for a direction to the developer to register the project under the
provisions of RERA. The developer in his submission stated that the
construction of the building was already completed in 2015, but due to various
ongoing legal litigation in different forums, he was unable to procure the
Occupation Certificate for the building till date. Chaterjee in his interim
order stated, In the present case, Occupation certificate has not been issued
till date, even after the completion of the construction of the project in the
year 2015. The building shall be treated as an ongoing project for which
registration is required. Hence interim order is passed.
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RELIEF FOR 500 HOME
BUYERS AS VGN CASE CLOSED
In
a big relief to 500 homebuyers who have bought apartments in VGN Fairmont at
Guindy, a Special Court for CBI cases has closed the case against VGN
Developers for causing wrongful loss of Rs 115 crore to Central government in
land acquisition. S Jawahar, has said investigation by Central Bureau of
Investigation did not establish the allegations against Leon Terattil, as there
was no sufficient evidence to launch prosecution against the accused for
offences of criminal conspiracy, cheating and criminal misconduct. The judge
said as per oral and documentary evidence, the allegations in the FIR that the
accused had caused wrongful loss to the government to the tune of 115 crore and
obtaining corresponding wrongful gain to themselves was not substantiated with
prosecutable evidence. The property initially belonged to Hindustan
Teleprinters Limited. It was sold to VGN property developers in 2013 for Rs 272
crore as VGN emerged the highest bidder. Since then, VGN had converted this
into a residential project consisting of 1600 apartments. The first phase was
launched in 2015 and close to 500 units were sold. The closing of the case came
as a big relief to 500 homebuyers who had bought apartments and banks which
funded these home loans. VGN now plans to deliver the project as per the
revised RERA timelines. VGN also confirmed that sale and construction of the
project is in full swing. Seven blocks are nearing completion which is part of
Phase 1, said H Sureshkumar, general manager, marketing, VGN Property
Developers Private Limited. We will be approaching ED who will also withdraw
the attachment order, he said. The appellate tribunal has already issued an
order to set aside provisional attachment on February 14, 2019. CBI will be
sending the copy to Enforcement Directorate, he said. ED had attached the
multi-storied residential building worth 115 crore under Prevention of Money
Laundering Act.
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COA SEEKS WRITTEN
EXPLANATION FROM KX1P ON NESS WADIA CONTROVERSY
The
Committee of Administrators (CoA) on Friday sought a written explanation from
Kings XI Punjab on the suspended arrest sentence handed to their co-owner Ness
Wadia for possession of cannabis in Japan. It has been learnt that, as of now,
the CoA will not hand over the matter to the IPL's Ethics Commitee comprising
acting president CK Khanna, acting secretary Amitabh Choudhary and treasurer
Anirudh Chaudhry. Industrialist Wadia was arrested at an airport in Japan's
Hokkaido for possession of 25gm of banned substance and sentenced to two years
of imprisonment, the verdict that had been suspended for five years. As per
IPL's Code of Ethics, a franchise may receive sanction if anyone related with
the team (player/owner) bring disrepute to the game. The CoA has asked KXIP
management to file a written explanation on what all has transpired. Agreed,
the incident has got nothing to do with the league directly but Wadia's arrest
does create bad optics. Once KXIP file their explanation, the CoA will take a
call on what needs to be done next, a senior BCCI functionary privy to Friday's
meeting told. When asked why the matter is not being handed to office bearers,
the senior functionary said, We now have an Ethics Officer in Justice DK Jain.
If need be, the matter will be handed over to him and the office bearers can
help him if required. Among other significant developments, the CoA through
amicus curiae PS Narsimha will intimate the Supreme Court that 26 units of BCCI
are now fully Lodha compliant and can hold their state unit's elections. Out of
the 36 BCCI units, there are 26 which are fully Lodha compliant and we expect a
few more to become fully compliant in the coming days. The report will be
submitted to the Supreme Court. The CoA is expected to appeal to the apex court
for an election date. As for the units that will be non-compliant, they will be
disqualified from voting at the AGM, the official said.
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IL&FS INVESTMENT
ARM SET TO EXIT HOSPITALITY INVESTMENTS
The
beleaguered Infrastructure Leasing & Financial Services Ltd (IL&FS) has
kick-started the process of exiting its investments in the Indian hospitality
industry. TripBorn Inc, an Indian last-mile commerce and connectivity
aggregator, said in a statement that it is acquiring 51% stake in Pravin
Rathore and Mahesh Gandhi owned hospitality firm Prama Hotels and Resorts for
an undisclosed sum. Post the conclusion of this transaction, TripBorn will
increase its shareholding in Prama to 100% by the end of the calendar year
2019. TripBorn did not share any details about how is it going to fund this
acquisition. Prama's primary business is of investing in, owning, managing and
operating hotels and related activities like food services, under its
subsidiaries viz Apodis Hotels & Resorts Ltd (Apodis) and IntelliStay
Hotels Pvt Ltd (IntelliStay). An IL&FS investment arm, IL&FS Investment
Managers Ltd (IIML) holds a majority stake in Apodis, which in turn owns 90%
stake in IntelliStay that operates hotels across four budget hotel brands -
i-Stay, Mango.Hotels, Mango.Suites and Apodis Collection. This means IIML will
completely exit its investment in the hospitality business by December-end this
year. While TripBorn did not disclose the deal size, it said in the statement
that Prama Hotels & Resorts generated approximately $8.5 million in revenues
for the year ended March 31, 2019. It added that the hotel company generated
positive cash flow from operations in this period. IntelliStay has been looking
to onboard a strategic investor for some time now. On the last count, it had 19
operational hotels, 13 in projects stage and 24 at a letter of intent (LoI)
stage. While the business is yet to become profitable, the IntelliStay
management was expecting to close the year with Rs 44 crore in net revenue to
books and Rs 7 crore in earnings before interest, tax, depreciation and
amortisation (Ebitda).
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VODAFONE IDEA ANNOUNCES
MULTI-MILLION DOLLAR IT OUTSOURCING DEAL WITH IBM
India's
largest telecom operator Vodafone Idea Ltd Friday announced a five-year
multi-million-dollar IT outsourcing deal with tech giant IBM. This engagement
will also contribute to Vodafone Idea's merger synergy objectives by reducing
its IT related costs, the telecom firm said in a statement. The company did not
divulge the size of the deal but some reports pegged it at about $700 million. The
collaboration will provide Vodafone Idea with a hybrid cloud based digital
platform to enable more intimate engagement with its over 387 million
subscribers (as of December 31, 2018), enhancing business efficiency, agility
and scale plus simplification of its business processes, it said. The new
infrastructure platform will remove constraints to exponential growth of data
usage driven by increasing consumption of video, streaming and digital
commerce, the statement said, adding that it will also drive enhanced customer
experience to millions of connected consumers and businesses in India. Vodafone
Idea is collaborating with leading global technology partners including IBM to
deploy new age technologies with built-in customisations and novel innovations.
We believe that use of IBM's hybrid and multicloud, analytics and AI security
capabilities will accelerate Vodafone Idea's progression to an open, agile and
secure IT environment, the statement said. The deal will also provide a
platform for fast-track joint initiatives in Artificial Intelligence and
Internet of Things. This five-year collaboration with IBM, opens new
opportunities for us to partner together in domains like cloud, AI (Artificial
Intelligence) and IoT (Internet of Things). We will also be able to leverage
collateral from the cloud partnership already announced between Vodafone and IBM
in Europe. Achieving synergies post-merger from the combination of Vodafone
India and Idea Cellular is a strategic priority for us and we continue to be
ahead of track, Balesh Sharma, said. IBM is supporting Vodafone Idea with an
option of extended flexible payment plan structure for the term of the contract
through its wholly owned subsidiary, IBM Global Financing.
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BERKSHIRE HATHAWAY
FINALLY BOUGHT SHARES OF AMAZON, SAYS WARREN BUFFETT
Warren
Buffett said Berkshire Hathaway Inc has bought shares of internet retailing
giant Amazon.com Inc for the first time, though he has not been the one doing
the buying Buffett said the purchase was made by one of his investment
managers, Todd Combs or Ted Weschler, and details would be disclosed later this
month in Berkshire's quarterly report of its US stock holdings. The purchase
marks a U-turn for Berkshire, where Buffett has long praised the leadership of
Amazon Chief Executive Jeff Bezos. Yeah, I've been a fan, and I've been an
idiot for not buying, Buffett told. Shares of companies often rise when
Berkshire reveals its support through new stakes, even when the purchases are
believed or known to have been made by Combs or Weschler, who together invest
about $26 billion.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
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