BS: NBCC CMD Anoop Mittal relinquishes post after govt denies extension

5 April 2019: The government has denied NBCC Chairman Anoop Kumar Mittal service extension till his date of superannuation, resulting in his demitting office a good 10 months before he would have retired.

Sources said Mittal’s term came to an end on March 31, 2019 and he was entitled for extension till he attained superannuation age of 60 years in January 2020 but the government refused to extend his services.

Mittal has since relinquished his office.

His charge has been temporarily given to a bureaucrat in the Ministry of Housing and Urban Affairs, they said.

Mittal, a career engineer, was appointed as head of the state-owned construction firm in 2013 for a five year period. Last year, he was given a one-year extension till March 31, 2019.

Sources said NBCC’s parent ministry had recommended extension of his service till January 31, 2020 but the approval of the competent authority did not come.

Mittal joined NBCC in 1985 as assistant engineer and rose through the ranks to head the company, which is into project management consultancy and real estate businesses. It has bagged many prestigious projects in the last few years, including the redevelopment of Pragati Maidan in central Delhi.

He is not the first person to have been denied an extension of service. The previous UPA government had denied Subir Raha the same as head of ONGC, P Banerjee as chairman of GAIL India Ltd and Sarthak Behuria as Indian Oil Corp (IOC) head.

When contacted, Mittal confirmed the development and said a new CMD with five year tenure should be appointed for the growth of the company.

“I am really thankful to the government and NBCC for giving me an opportunity to serve the company for six years,” he told PTI.

Talking about his tenure, he said NBCC has become a large company with an order book of around Rs 90,000 crore.

The company has established itself as a major player in redevelopment projects with self-generating revenue model, he said.

Mittal said the company has shown willingness to take up stalled projects in Delhi-NCR for the benefit of all stakeholders, including home buyers.

NBCC has bid for acquiring Jaypee Infratech, which is undergoing insolvency process. It is also completing some projects of Amrapali, as per the direction of the Supreme Court.

The Business Standard reported

BS: RBI may take accomodative stance in revised NPA circular

5 April 2019: The RBI is likely to adopt a more accommodative approach towards resolution of stressed assets when it issues a revised circular sometime in the next few days, against the February 12 circular quashed by the Supreme Court.

Sources said the major contention in the controversial February 12, 2018, circular that got challenged in the court leading to its quashing, will be done away with in the new circular.

Instead, banks will be given more time to identify and qualify an account as bad debt and also be given more time to resolve the same.

The Reserve Bank of India is likely to retain the main contours of its February 12, 2018 circular while making the referral to National Company Law Tribunal (NCLT) non-compulsory, sources told IANS.

It might, however, be guided by suggestions earlier given by the Indian Banking Association (IBA) for debt resolution for classification of Non-Performing Asset (NPA) and resolution of bad assets.

Bankers had suggested qualifying a loan as bad debt if the default was for a period of at least 90 days and not one day as was the case in the February 12 circular.

A bank-led resolution should start only after that, according to the bankers.

Moreover, it had suggested a 60 day incubation period post this time for identifying the default. After this, banks would resolve a case within 180 days and consider referring the case to NCLT post that period if the majority of the lenders agreed.

On Tuesday, the Supreme Court struck down a February 12, 2018 circular of the RBI that asked banks to initiate insolvency process against companies even if there was a day’s delay in payment of dues.

As per the circular, banks were told to start the resolution process as soon as a borrower defaulted on a term loan and were given 180 days to cure it, failing which the account would have to be referred to the NCLT. It also said that any company that defaulted on its loan repayment obligation even by a day should be declared a defaulter.

Further, under the new norms, lenders can decide on the resolution if 66 per cent of the lenders agree to take this recourse. This is similar to the adoption of a resolution under IBC where 66 per cent of votes is required.

The revised circular on NPAs is unlikely to include the pre-IBC restructuring tools like Strategic Debt Restructuring (SDR), Corporate Debt Restructuring (CDR), Sustainable Structuring of Stressed Assets or S4A.

In the previous circular the RBI had withdrawn all existing debt restructuring schemes — S4A, CDR, JLF, and SDR — and asked banks to draw resolution plans for all assets where the banking sector’s exposure was more than Rs 2,000 crore.

On Tuesday, RBI Governor Shaktikanta Das said that the recent Supreme Court ruling did not take away the powers of the central bank, nor would it impact the major default cases undergoing insolvency proceedings.

“We will soon get the revised circular. There will not be any undue delay in that,” Das said.

On whether the recent instances of the RBI being taken to the court have impacted its actions, Das said: “It’s always the democratic right of any person, individual or corporate entity to challenge the decision of any authority in the court of law. The RBI cannot be an exception to this.”

The Business Standard reported

ET:

5 April 2019: Lenders to Adhunik Metaliks have issued shares and debentures worth Rs 40 crore to Liberty House as a first step for the UK-based company to take control of its first-ever asset in India after protracted litigation.

The company’s monitoring committee has approved issuing 20 million equity shares of Rs 10 each and 20 million compulsory convertible debentures (CCDs) of Rs 10 each in line with the resolution plan approved by the NCLT, Kolkata bench on July 17, 2018, Adhunik Metaliks told the BSE. 

The move comes after an NCLAT order last month refused to recognise a Rs 108-crore outstanding claim by MSTC, an operational creditor to Adhunik, as the “resolution process cost”. 

The claim was the reason behind Liberty House’s refusal to pay the Rs 410-crore it had offered for Adhunik even after the plan was approved in July last year. 

It had argued that it was not liable to pay the amount as part of the resolution plan. 

With MSTC’s claim set aside, the same NCLAT order has given LHG time until April 14 to pay the entire upfront amount of Rs 410 crore it offered for Adhunik. 

The next step will likely be the de-listing of the company, said a person aware of the development. 

Sanjeev Gupta-led Liberty House has in the past few years acquired several distressed assets in Europe, UK and Australia. But in India, it has taken long to succeed in an acquisition. 

Eyeing the bankruptcy code as an opportunity to grab a foothold in India, Gupta had put in bids for many assets — Amtek Auto and its subsidiaries Castex and ARGL, ABG Shipyard, Bhushan Power and Steel and Adhunik Metaliks. 

While in ABG Shipyard and BPSL, its bids fell short of making the cut, its refusal to pay the promised sum of money for Amtek Auto and its subsidiaries citing issues in the valuation of the businesses had been viewed with scepticism by lenders. 

The bankruptcy court in Chandigarh found its approach “casual” and has ordered re-bids for these companies. 

Adhunik Metaliks will be one of the first few cases in India under the IBC where the acquirer will revive a closed unit. It owes Rs 5,371 crore to lenders, who are taking a haircut of almost 92 per cent by accepting Liberty House’s offer.

The Economic Times reported

IE: Mother Dairy invested Rs 190 crore in IL&FS, sent SOS to PM after default

5 April 2019: Days before IL&FS defaulted on loan repayments in the last week of August, Mother Dairy Fruit and Vegetable Private Ltd (MDFVL) decided to make a series of investments totalling over Rs 190 crore in the beleaguered infrastructure company.

MDFVL, a wholly owned subsidiary of National Dairy Development Board that produces, processes and sells dairy products, fruits and vegetables, invested Rs 190.84 crore in inter-corporate deposits of IL&FS (for a period of 8-16 days) in a series of six transactions between August 20, 2018 and August 28, 2018.

These investments happened at a time when the IL&FS Group’s debt woes were in the public domain and the IL&FS group was busy selling its assets to raise funds to honour its debt repayments.

In February 2019, seeking Prime Minister Narendra Modi’s intervention in recovering the due amount (Rs 190.84 crore) from IL&FS, Sanjeev Khanna, the CEO of MDFVL, wrote a letter to the PM apprising him of the situation and that the IL&FS default has “weakened” the company’s ability to pay to the farmers.

“Farmers are dependent upon MDFVL for their livelihood as the amount invested in IL&FS was payable to farmers as the initial investment was made for a short duration (8-16 days maturity period). The failure on part of IL&FS to pay the amount has resulted in severe cash crunch for MDFVL and it is struggling to pay the farmers and keep the supply chain of agricultural products running,” Khanna said in his letter.

He further requested the PM “to kindly intervene in this matter and help us in recovering the due amount from IL&FS in the interest of farmers.”

Significantly, even as IL&FS defaulted on the payments to MDFVL on the due dates between Sep 5 and Sep 8, 2018, Mother Dairy decided to renew the investment for one more month at the request of IL&FS.

Incidentally, Khanna has been CEO since Julky 2018.

In its letter to the PM, MDFVL CEO submitted that MDFVL made an investment of Rs 190 crore in ICDs of IL&FS in August 2018 and that “IL&FS failed to pay the maturity amount on the due date citing issue of temporary liquidity crisis and requested MDFVL to renew ICDs for another month. Accordingly MDFVL renewed the investment for one more month.” He added that, “the amount along with interest amount remains unpaid till date.”

Making matters worse for investors such as MDFVL is the fact that the National Company Law Appellate Tribunal (NCLAT) has recently granted moratorium against all claims against IL&FS.

Responding to queries from The Indian Express, an MDFVL spokesperson said: “Investments in IL&FS were initiated in February 2016. There has been a default on the part of IL&FS and the judicial process including adjudication in NCLAT is on. The matter is sub-judice and we would not like to comment further.” The statement added that there has been no default on payments to farmers by the company.

An IL&FS spokesperson declined to comment.

The IndianExpress reported