BS: NHPC’s takeover plan of crisis-hit Teesta-VI hydro power unit faces hiccups

31 May 2019: NHPC’s takeover plan of Lanco Teesta Hydro Power’s beleaguered hydro power unit in Sikkim Teesta-VI (500 MW) is facing hiccups, after approval from the Cabinet. 

The National Company Law Tribunal (NCLT), which approved the bid of NHPC, will hear the matter again over the issue of escalated cost.

A senior executive said the plant suffered damages during the course of matter in the NCLT. “The amount totals to Rs 9 crore which is not that much but changes the offer amount. So, NCLT will hear the case again and approve the revised cost in July,” he said.

 NHPC emerged the highest bidder with a bid amount of Rs 907 crore. The investment proposal for an estimated cost of Rs 5,748.04 crore was approved by the Cabinet Committee of Economic Affairs (CCEA) in March 2019. “The project would be completed in five years. The cost is estimated at close to Rs 11 crore per MW but due to abundant water, the tariff would turn out to be Rs 4.7 KwH,” Balraj Joshi, chairman and managing director, NHPC, had said.

The project was being developed by Lanco. Owing to financial crunch in the company, the project was not completed  as per scheduled. The insolvency resolution process was initiated in the NCLT against the project.

NHPC executives said Bihar, West Bengal and Jharkhand have given in-principle nod for buying power from Teesta-VI.

However, an earlier agreement with Maharashtra is also posing a problem. Maharashtra State Electricity Development Corporation (MSEDCL) moved the state electricity regulator to terminate its power purchase deal with Teesta-VI. “The case doesn’t stand as Lanco had terminated the contract already before the project landed in NCLT,” said an NHPC executive.

NHPC is also looking at more stressed hydro units but only through the NCLT route. 

“JAL Power in Sikkim and Demwe in Arunanchal Pradesh are some of the projects which the company is looking at. Demwe is in NCLT and we are looking at it. We will evaluate JAL whenever the expression of interest is issued by the insolvency professional,” said executives.

As reported on smart investor.in

ET: IRPs admit Rs 66,000 crore of claims against RCom, arms

31 May 2019: The bankruptcy court appointed interim resolution professionals (IRPs) of Reliance Communications (RCom) and two of its subsidiaries have admitted claims of Rs 66,000 crore, more than three fourths of those filed, against the companies, people in the know said.

Bankruptcy proceedings of RCom, Reliance Telecom and Reliance Infratel formally kicked off on Thursday, with a meeting of the banks that have lent money to them to lay out the timelines for the process and to appoint new resolution professionals.

Banks and other financial institutions have filed total claims of around Rs 85,000 crore against the Anil Ambani-promoted telecom company and its units, the people said.

The lenders do not own any equity shares in RCom, though an initial plan had contemplated them converting part of their debt into a controlling stake. The promoters own 22% of the company as per latest stock exchange filings. The rest is held by public shareholders.

While claims worth Rs 49,000 crore have been filed against RCom that houses spectrum and some parts of the now-defunct mobile telephony business, the second-largest share of claims at Rs 24,000 crore was against Reliance Telecom, which held the GSM operations. Banks have filed claims worth Rs 12,000 crore against Reliance Infratel, the company that houses the telecom tower business of the group.

A large number of claims are still under verification and almost 90% of those against the parent company have been admitted “provisionally”, a person in the know said, implying that those were still subject to legal challenges by the IRPs if not found to be accurate.

Representatives of 15 banks met to discuss the way forward for the bankruptcy process where IRPs from advisory firm RBSA briefed the creditors on the claim processing status.

RBSA did not respond to emailed queries from ET till press time Thursday.

RBSA’s Pardeep Sethi is the IRP for RCom, while its Manish Kaneria and Mitali Shah are managing the bankruptcy proceedings for Reliance Infratel and Reliance Telecom, respectively.

State Bank of India, which has the largest exposure to RCom, has proposed to replace RBSA with Deloitte as the resolution professional, ET had reported in its edition on May 7.

The lenders decided to subject the proposal on Deloitte to an electronic vote, the results of which are likely to be disclosed early next week.

“It is a policy of the bank not to comment upon individual accounts and its treatment,” an SBI spokesperson said in response to ET’s queries.

RCom has had to go down the bankruptcy route after several failed attempts at restructuring the company’s debt and selling assets such as its telecom towers and spectrum.

The company announced through a stock exchange notification on February 4 that it would subject itself to insolvency proceedings at the National Company Law Tribunal (NCLT), as it was unable to pay its debt.

Swedish telecom equipment maker Ericsson had first dragged RCom to NCLT in May last year, on the grounds that the company had not paid Rs 550 crore of dues for equipment supplied to it. RCom initially resisted the insolvency proceedings, but was forced to pay under directions of the Supreme Court.

RCom stopped wireless telephony services to customers in late 2017 and said it would only focus on B2B offerings to reduce costs.

The Economic Times reported

FE: Jaypee Infratech insolvency: Homebuyers’ role key as CoC votes on NBCC bid

31 May 2019: Lenders to insolvent Jaypee Infratech (JIL) on Thursday decided to put to vote state-run NBCC’s revised bid for the debt-laden realty firm. The exercise will go on for 10 days from Friday in which apart from 13 banks, over 23,000 homebuyers too will cast their votes via electronic mode.

Homebuyers and banks have voting shares of 59.26% and 40.65%, respectively, in the committee of creditors (CoC).

As per Section 28(3) of the Insolvency and Bankruptcy Code, a 66% vote is required for the CoC to approve a resolution plan. However, since it is difficult to get a section of homebuyers to take part in the voting process — Suraksha Realty bid, for instance, could not be approved by the CoC as a third of the homebuyers did not vote — it is uncertain if the NBCC bid would pass muster in CoC.

IDBI is the lead banker having an 18.01% voting share.

Sources said though JIL lenders laid out fresh conditions for accepting the NBCC bid — they, among other things, demanded an additional 500 acre under the debt-asset swap plan — , NBCC did not modify its bid.

“NBCC refused to sweeten its bid. However, the lenders still decided to go for voting on NBCC’s bid in line with the direction of the court (NCLAT). NBCC has put exactly the same bid,” said a source present in the meeting.

Sources added that even as Adani group had submitted a non-binding offer on May 28 for acquiring JIL, lenders did not discuss the proposal in their meeting on Thursday since “it was not on the agenda”.

The National Company Law Appellate Tribunal (NCLAT) had on May 17 asked the CoC to renegotiate with NBCC till May 30 and start fresh voting from May 31. The appellate tribunal had also said that it would be open to the CoC to approve the plan, but in case the CoC was not inclined to accept the plan, it would not pass any order of rejection without prior permission of the NCLAT.

NBCC’s latest bid for the insolvent firm includes infusion of Rs 200-crore equity capital, transfer of 950 acres of land worth Rs 5,000 crore as well as Yamuna Expressway to banks and completion of flats by July 2023 in order to settle an outstanding claim of Rs 23,723 crore of financial creditors, including banks and homebuyers.

Through its May 28 letter, lenders had asked NBCC to “reinstate 1,426 acres of land” from 950 acres offered earlier to the secured financial creditors under the debt asset swap plan. The lenders also demanded that the land parcel be made available to secured financial creditors on a pro-rata basis.

Lenders have also asked NBCC to bear any income tax, GST liability or corporate tax liabilities which may arise in future on account of transfer of land parcels. These would not be borne by the secured financial creditors. It also asked NBCC to get necessary nod from the income tax authorities for implementation of the bid if the relief sought by the public sector firm for any future tax liability is not approved by the adjudicating authority.

In 2017, Jaypee Infratech went into insolvency process after the National Company Law Tribunal (NCLT) admitted an application by an IDBI Bank-led consortium seeking revival of the realty firm. In the first round of insolvency proceedings conducted last year, the `7,350-crore bid of Lakshdeep, part of the Suraksha Group, was rejected by lenders.

Later in October 2018, the IRP started the second round of bidding process to revive JIL on the NCLT’s direction. JIL’s CoC had earlier this year rejected a bid by Mumbai-based Suraksha Realty through a voting process.

The Financial Express reported

BS: NCLT rejects Essar Power Jharkhand ex-promoters’ bid to clear dues

30 May 2019: The principal bench of the National Company Law Tribunal (NCLT) on Thursday rejected Essar Power Jharkhand’s former promoters’ bid to take the company out of insolvency by offering to pay Rs 1,200 crore as a one-time settlement against a total debt of close to Rs 5,600 crore. The promoters had offered to pay the amount and settle the dues under Section 12 (A) of the Insolvency and Bankruptcy Act. Section 12A of the IBC allows the corporate debtor another chance to make good on the default and retain control over the firm even after the case is admitted to the NCLT. 

Such plans, however, must be approved by more than 90 per cent of the lenders. ICICI Bank, which had dragged Essar Power Jharkhand to the NCLT and comprised of nearly 99.3 per cent of the Committee of Creditors (CoC), had rejected the former promoters’ plea to pay Rs 1,200 crore and take the firm out of insolvency. ICICI Bank had in January 2018 moved the principal bench of the NCLT against Essar Power Jharkhand, seeking to recover Rs 3,626 crore.

The company was declared a non-performing asset on September 30, 2016. The project is one of the projects which is incomplete and has been tagged ‘difficult to resolve’ by the Centre.

Envisaged in 2008, the project is long overdue and barely 45 per cent complete until now. Its cost has doubled in these years to Rs 104 billion, according to estimates of the Central Electricity Authority (CEA). The coal block allotted to the project was de-allocated post a Supreme Court ruling in 2014.

Essar Power Jharkhand owes creditors around Rs 5,600 crore as of May 22, 2018, according to a legal document on the company’s website. Workmen and employees of Essar Power Jharkhand have filed claims worth Rs 3.52 crore with the resolution professional. As on May 22, 2018, the resolution professional had accepted claims worth Rs 438.7 crore.

The Business Standard reported

BS: Doha Bank moves law tribunal, seeks stay on decisions of RCom lenders

30 May 2019: In a surprise intervention in the Reliance Communications (RCom) insolvency matter, Doha Bank, which is one of the financial creditors to RCom’s subsidiary Reliance Infratel, has moved the National Company Law Tribunal (NCLT) seeking a stay on the decisions of the meeting of the committee of creditors (CoC) held on Thursday.

Doha Bank has alleged that the corporate bank guarantees given by Reliance Infratel for RCom have been invoked by the banks and this, in turn, has increased Reliance Infratel’s debt significantly.

The invoking of corporate guarantees by banks has resulted in a significant reduction in the voting rights of a syndicate of four banks, including Doha Bank, which together had an exposure of around Rs 1,400 crore in Reliance Infratel. The counsel, appearing on behalf of Doha Bank, said that the four banks earlier had a 55 per cent voting right in the Reliance Infratel CoC. But now, with banks invoking the corporate guarantees, and interim resolution professional accepting the claims, their voting rights have been reduced to 15 per cent. 

Doha Bank also said that the interim resolution professional had admitted the claims of the banks that have invoked such bank guarantees without informing the four syndicate banks. This, it said, marginalises them in the CoC. The matter will be next heard on May 31. Separately, the interim resolution professional filed the progress report on RCom’s corporate insolvency resolution process (CIRP) to the tribunal. In the last hearing, the tribunal had asked the interim resolution professional to submit the progress report of the CIRP and had granted exclusion of 357 days spent in litigation from the CIRP process. 

The CoC meet on Wednesday was supposed to review the claims admitted and appoint a resolution professional. Lenders voted in favour of appointing Deloitte as the resolution professional. RBSA Advisors was the interim resolution professional. 

The CIRP of the debt-ridden telco resumed after the National Company Law Appellate Tribunal (NCLAT) vacated the stay on the CIRP of RCom. 

Operational creditor Ericsson, in September 2017, had originally filed for insolvency proceedings against RCom. This was accepted by the NCLT over RCom’s failure to pay dues to the tune of Rs 1,500 crore. However, insolvency was later stayed by the NCLAT as both parties reached a settlement, with RCom agreeing to pay Rs 550 crore. Meanwhile, RCom moved the Supreme Court, seeking an extension of the deadline to pay the amount to Ericsson because of a delay in completion of spectrum sale and other assets, to which the apex court granted it time till December 15, 2018. After RCom failed to pay, Ericsson moved the SC wherein the court ordered Anil Ambani, Reliance Telecom Chairman Satish Seth, and Reliance Infratel Chairperson Chhaya Virani to pay Rs 453 crore by March 18, or face a jail term of three months. Anil Ambani later paid the amount.

Ericsson has been opposed to RCom’s move of undergoing insolvency proceedings. Under proceedings, dues of financial creditors are settled first and then operational creditors get paid. The NCLAT observed in case proceedings against RCom and two other firms were restarted, Ericsson might have to refund the money.

The Business Standard reported

BS: NCLT approves Tata Steel’s bid for Bhushan Energy; rejects objections

30 May 2019: The principal bench of the National Company Law Tribunal (NCLT) on Thursday approved Tata Steel’s nearly Rs 800-crore bid to acquire Bhushan Energy. The NCLT, while approving this bid, also rejected Bhushan Energy’s former promoter Neeraj Singhal’s objections to Tata Steel’s bid for the debt-laden company.

As part of the plan, Tata Steel will offer an upfront payment of Rs 730 crore, while it will pay an additional Rs 50 crore to operational creditors of the company. A further sum of Rs 367 crore will be infused by Tata Steel in the company as a part of equity infusion, depending on the prevalent market conditions. Till the time Tata Steel takes over the company and starts running it, the Committee of Creditors and the resolution professional of the company will act as monitoring agency to oversee the day to day functioning of the company, the NCLT said. A detailed copy of the order is awaited.

Bhushan Energy was taken to the NCLT by State Bank of India (SBI) for not paying its dues worth Rs 500 crore. On June 6, the NCLT allowed an extension of 90 days for the company to find a resolution plan when it failed to find any within the 180-day moratorium. Incorporated in 2005, Bhushan Energy is based in Dhenkanal, Odisha. It is an arm of Bhushan Steel. Bhushan Energy had reported a gross debt of Rs 2,336 crore in 2015-16 (April-March). 

The NCLT had in June last year extended the insolvency resolution period for Bhushan Energy by 90 days beyond the initial period of 180 days after the lenders to the company had failed to zero in on one bidder for the company.

The Business Standard reported

BS: Coal India posts record 362.46% rise in Q4 profit; net revenue jumps 7.53%

30 May 2019: A drastic reduction in employee benefit expenses apart from other operational efficiencies backed by higher price realisations, helped Coal India post a record increase of 362.46 per cent in its net profit at Rs 6,024.23 crore for the quarter ended March 31, 2019.

The coal monolith earned a net profit of Rs 1,302.63 crore during the corresponding quarter of the last fiscal year. The company’s net revenue also jumped 7.53 per cent to Rs 28,546.26 crore as against the earnings of Rs 26,547.58 crore during the fourth quarter (Q4) of FY18.

Employee benefit expenses, during the quarter under review, came down by 35.74 per cent at Rs 10,700.79 crore as against Rs 16,651.20 crore posted in the Q4FY18.

Sector analysts reasoned that the sweeping fall in employee benefit expenses was primarily on account of the payment of one-time increase in gratuity settlement of Rs 7,384 crore.

Taking this into consideration, the total employee benefit expenses rose by 15.47 per cent during the quarter and the pre-tax profit of the company stood at around Rs 1,508 crore during the last three months of the last fiscal year. In the January-March period of the 2017-18 fiscal year, the pre-tax profit stood at Rs. 1,163.35 crore.

“Better average realization in both coal, Fuel Supply Agreement (FSA) and e-auction sales coupled with operational cost control propelled the company to its best ever financial performance. Importantly, coal quality variance was under control and we have been able to arrest the grade slippage to large extent”, a company official said.

Average realisation per tonne of coal in the FSA saw an 8 per cent increase to Rs 1,348 during 2018-19 from the previous level of Rs 1,243 during 2017-18. The overall average realisation per tonne of coal went up to Rs 1,529 during 2018-19 compared to Rs 1,398 on a year-on-year basis.

During the quarter, Coal India sold 142.42 million tonne (mt) of coal via the FSA route which helped it earn Rs 20,794.15 crore while another Rs 4,602.64 crore was earned by selling 16.71 mt of coal via the e-auction route.

Contractual expenses, the second-largest cost overhead, also fell by 1.38 per cent to Rs 3,838.56 crore benefiting the company post higher profits.

A company official said that for the full 2018-19 fiscal year, all the subsidiaries of Coal India had managed to earn a profit.

The Business Standard reported

TN: Patanaji seeks funds from state-run banks to buy Ruchi Soya

30 May 2019: Yoga guru Baba Ramdev-promoted Patanjali Ayurved has sought help from state-controlled banks to fund its Rs 4,350 crore acquisition of Ruchi Soya Industries. In April, Patanjali Ayurved acquired the debt-ridden edible oil company Ruchi Soya with a bid of Rs 4,325 crore in an insolvency auction started by lenders to recover over Rs 9,300 crore loans. 

The homegrown FMCG major is actively considering raising debt with a maturity of five years and above from State Bank of India, Punjab National Bank, Bank of Baroda, Union Bank and Jammu & Kashmir Bank, people aware of the development told the Economic Times. 

The company is all set to join hands with the lenders to raise over Rs 3,700 crore while Rs 600 crore will be generated through internal accruals, the financial daily report said.

The publication quoted one of the persons as saying, “The funding is in the final stages of negotiation and the interest rates will be finalised soon. Patanjali had earlier approached several non-banking channels but it backtracked after these investors sought high level of disclosures.”

It is worth noting that Ruchi Soya Industries has dues of about Rs 9,345 crore to financial creditors. State Bank of India (SBI) has the maximum exposure of approximately Rs 1,800 crore, followed by Central Bank of India Rs 816 crore, Punjab National Bank Rs 743 crore and Standard Chartered Bank-India Rs 608 crore.

In August 2018, Adani Wilmar emerged as the highest bidder after a long-drawn legal dispute with Patanjali, had in December 2018 wrote to the resolution professional, highlighting major delays in the insolvency process that led to the decline of Ruchi Soya’s assets.

Patanjali had in April raised its bid price by about Rs 200 crore to Rs 4,350 crore. This excluded a fund infusion of Rs 1,700 crore into the company.

The Haridwar-based company will become a key producer of soybean oils and other products following the acquisition of Ruchi Soya. The transaction may give a boost to Patanjali uphold its earlier growth momentum.

As reported on ETnownews & TimesNowNews

BQ: Will RCom Go The Aircel Way? No, Say Bankers

30 May 2019: Earlier this month, lenders to insolvent telecom firm Aircel Ltd. agreed to take a 99 percent haircut on the Rs 19,800 crore in loans owed by the firm to banks. They took home a meagre Rs 150 crore shelled out by an asset reconstruction company.

Aircel’s fate, which symbolises the troubles that India’s telecom industry has gone through over a turbulent decade, led to concerns that banks would need to take steep haircuts in the resolution process of other stressed telecom firms. Most notably— Reliance Communications Ltd., which is also being resolved under the Insolvency and Bankruptcy Code.

Lenders, however, say that the extent of losses seen in Aircel are a one-off and will not be repeated with RCom. Banks are confident of reasonably high recoveries from RCom over the next few months, said three senior bankers on condition of anonymity. These bankers, however, are unable to put a number to the expected recoveries given that the RCom insolvency process is at an early stage.

According to these bankers, RCom has reasonably strong assets and could attract bidders including Mukesh Ambani’s Reliance Jio Infocomm Ltd.

RCom had debt of over Rs 36,000 crore as on March 2018. This is likely to have gone up to over Rs 40,000 crore now, the three lenders quoted earlier said. Banks involved in the RCom insolvency include State Bank of India, Bank of Baroda, Yes Bank Ltd., IndusInd Bank Ltd., China Development Bank, Industrial & Commercial Bank of China, and 20 other lenders.

Assets With Realisable Value

RCom’s optical fibre, tower, media convergence nodes and wireless spectrum have high realisable value, according to the bankers quoted above. The company also owns real estate assets across Mumbai, Delhi, Chennai and Kolkata, which can help in improving recoveries.

According to the company’s annual report for 2017-18, it has:

  • Over 122 MHz of 4G spectrum.
  • 43,000 tower assets.
  • 2,80,000 km of optical fibre assets in India, U.S., Europe, Middle East and Asia Pacific region.

The first of the three bankers quoted earlier said that the consortium of lenders is confident that RCom will attract many bidders under the IBC process, since chances of challenging a decision under the code would be difficult. The successful bidder would end up owning the company’s assets without any attached liabilities, since all debt-related issues would be resolved under the IBC, this banker said.

The second banker quoted earlier said that lenders are confident of recovering a “reasonable” portion of their debt exposure, provided there are no major delays in resolving the account. In resolution of large insolvency accounts like Bhushan Power and Steel Ltd., Alok Industries Ltd. and Essar Steel Ltd., banks have faced considerable challenges due to judicial delays, the second banker added.

The BloombergQuint reported

FE: Adani Power bid for GMR Chhattisgarh approved by lenders

30 May 2019: All 17 lenders to GMR Chhattisgarh Energy have approved Adani Power’s bid for the 1,370 megawatt (MW) pulverised coal-fired plant in Raipur, a senior official at the Power Finance Corporation (PFC) told reporters on Wednesday. He said KSK Mahanadi, another stressed project for which Adani had earlier put in a bid, will be heading back to the National Company Law Tribunal (NCLT) for a fresh insolvency procedure.

Rajeev Sharma, chairman and managing director of PFC, said his company is expecting a recovery of close to 50% from GMR Chhattisgarh, against which it has already provided 51%. “I am confident that within the next one month or maximum two months, we should be able to recover 50% from this project,” he said.

PFC’s exposure to GMR Chhattisgarh is about Rs 1,000 crore. The power project’s total outstanding debt stood at Rs 8,800 crore at the end of FY18, according to its parent firm GMR Infrastructure’s annual report for the year.

As for KSK Mahanadi, lenders have decided to approach the insolvency tribunal a second time after Adani Power withdrew its bid for the project. Earlier, the project had been referred to the NCLT when lenders were unable to resolve it by other means over the six-month period between March 1, 2018 and August 27, 2018, as stipulated by the Reserve Bank of India’s (RBI) February 12, 2018 circular.

On April 2, 2019, the Supreme Court struck down the February 12 circular as ultra vires. As a result, lenders withdrew insolvency petitions against three power projects, including KSK Mahanadi, which owes its lenders more than Rs 16,000 crore.

The other two projects — Rattan India Amravati and Rattan India Nasik — are close to resolution, Sharma observed. For Rattan India Nasik, the Maharashtra Electricity Regulatory Commission has given its approval for operationalising a 507-MW power purchase agreement (PPA) with Maharashtra discom.

The resolution plan will be finalised after the operationalisation of the PPA. For Rattan India Amravati, the PFC has received a revised one-time settlement proposal and the company is in discussion and negotiating with the borrower. “In Rattan India Amravati, we are expecting almost 50% recovery. We understand that this will be a faster and better route outside the NCLT,” Sharma said.

Another stressed asset, GVK Ratle, where the PFC had an exposure of `800 crore, has been upgraded to the standard category from the non-performing asset (NPA) category in the quarter ended March 2019. The borrower has been servicing its dues for the past one year and the PFC has reversed provisions worth Rs 650 crore in this account.

PFC expects 100% recovery of the principal amount in the accounts of Dans Energy, Shiga Energy and Essar Transmission, to which it has an aggregate exposure of Rs 1,400 crore and against which it holds provisions to the tune of 11%.

The Financial Express reported