TOI: Jaypee buyers want to be in monitoring committee

7 June 2020: Despite a growing clamour for fast takeover the of debt-ridden Jaypee Infratech, state-run NBCC has said that it will wait for a clear direction from the National Company Law Appellate Tribunal (NCLAT) to start construction activity at the stalled Wish Town project.

Meanwhile, a homebuyers’ association has appealed to the NCLAT to be made a party in the interim monitoring committee that will look into the day-to-day affairs of the builder company.

“There has been a mismatch in the financial responsibility we have taken for the completion of Wish Town and what NCLT has actually awarded us. Unless the NCLAT settles it in our favour, we will not initiate any takeover bid,” VK Chaudhary, chief general manager of NBCC told TOI.

“Construction work at the Wish Town project is in progress and a monitoring committee is present, but NBCC will not get involved without a 100% clarity from the court,” he added.

Of 35,000 Wish Town flats, Jaypee Infratech claims that just 19,000 flats are left to be constructed.

Surprisingly, JIL completed 10,000 flats during the insolvency resolution period from 2017-2019. JIL’s day-to-day operation is now supervised by a monitoring company, which includes former interim resolution professional Anuj Jain and NBCC officials.

However, the Wishtown Welfare Society with a membership of 1,248 homebuyers has appealed to the NCLAT for its inclusion in the monitoring committee. “In our appeal, we have pointed out that the monitoring committee that will implement the resolution plan has no homebuyer representative,” said Raunak Jain, the legal counsel for the homebuyers.

Commenting on the absence of homebuyers from the monitoring committee, former interim resolution professional Anuj Jain said, “The investors in the project can only be part of the panel if the NCLAT gives its nod to the same.”

Source: The Times of India

TOI: Debt recovery tribunals not functional, bank moves SC

7 June 2020: The banking industry has sought relief from the Supreme Court from the double blow dealt to it by Covid pandemic. First, it depressed financial activities and second, Debt Recovery Tribunals (DRTs) have remained shut for more than two months due to lockdown, seriously impeding recovery of dues.

Kotak Mahindra Bank, through senior advocate V Giri, told a bench of Chief Justice S A Bobde, Justices A S Bopanna and Hrishikesh Roy on Friday that non-availability of DRTs and Debt Recovery Appellate Tribunals (DRATs) during lockdown denied the banking and financial institutions the essential forum for recovery of their dues under Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and Securitisation and Recovery of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, 2002.

The bench issued notice to the Centre and asked the bank to give a copy of the petition to solicitor general Tushar Mehta. “We want to know about the functioning of DRTs and DRATs,” the bench asked the Centre.

The bank’s petition also raised the issue of snail-paced process in the DRTs and DRATs because nearly half of the presiding officers’ posts are lying vacant. “At present, 18 of the 39 DRTs across the country do not have permanent presiding officers, and also lack competent quasi-judicial and judicial staff,” it said.

The bank said while the SC, high courts and even district courts have provided for video-conference hearing of urgent matters to mitigate hardship in the absence of regular judicial forums, DRTs and DRATs have made no provision for facilitating e-hearing of urgent debt recovery matters which the banks want to be adjudicated.

It said though e-filing facility has been provided at only five DRTs at Delhi, Kolkata, Dehradun, Mumbai and Chennai, no facility is being given for urgent hearing of these matters, thus preventing the banks and financial institutions from getting interim relief.

“Adjudication of debt recovery cases by DRTs and DRATs are critical for the stability of banking and financial institutions and, by extension, the economic health of the country,” it said.

The petitioner feared that absence of urgent adjudication of debt recovery cases could lead to an increase in the number of NPAs in the books of the bank. “Because of delay in disposal of matters, the value of the mortgaged assets held by the petitioner bank rapidly deteriorates resulting in a drastically reduced recovery. Extremely delayed recoveries of debts adds to the problem of liquidity and reduces the lending capacity and/or willingness to lend,” Kotak Mahindra said.

Source: The Times of India

MC: Edelweiss group acquires Navayuga group’s road assets in north-east India for $150 million

7 June 2020: The Edelweiss group, on June 7, announced the buyout of two annuity road assets in north- east India from engineering and core infrastructure player Navayuga Engineering ,the flagship entity of the Hyderabad based Navayuga group which is in deleveraging mode.
“The buyout has been struck for an enterprise value of nearly $150 million,” a source with knowledge of the matter told Moneycontrol. The transaction is one of the first infrastructure deals to be closed during the ongoing lockdown.

With the government’s thrust on boosting economic activity in north- east India, The Dhola and Dibang roads are of strategic importance as they ensure seamless all-weather connectivity between north- east and the rest of India. The Dhola bridge – the country’s longest river bridge, inaugurated by Prime Minister Narendra Modi in 2018 has opened new doors for economic development to both the states of Assam and Arunachal Pradesh.
The assets, namely Navayuga Dhola Infra Projects Limited (in Assam) and Navayuga Dibang Infra Projects Private Limited (in Arunachal Pradesh) have been acquired by the Edelweiss Group’s alternative investment fund Edelweiss Infrastructure Yield Plus and its portfolio company Sekura Roads Ltd.

Edelweiss Infrastructure Yield Plus which was floated two years back has gradually emerged as one of the most active domestic acquirers in the infra segment and now manages assets worth $1.5 billion. It competes with the likes of IndiGrid, Cube Highways and funds like GIC, KKR & Actis.
The fund is present in the transmission, road/highways and renewable energy segment and looks at helping Indian infrastructure companies to recycle their capital and focus on their core construction business. In June 2019, it acquired two transmission assets from Essel Infra and in January 2020, it acquired a 74 percent stake in French gas and power utility Engie’s solar assets in India.

Edelweiss Alternative Asset Advisors which manages Edelweiss Infrastructure Yield Plus has an AuM of over Rs. 28,000 crores. It focuses on providing long term growth capital to corporates. “Acquiring operating infrastructure assets provides impetus to the revival of the sector by helping construction companies to release capital and de-lever, enabling them to commence new projects which contribute to nation building and is becoming the core model to meet India’s infrastructure capital requirement,” said Hemant Daga, Deputy CEO – Edelweiss Global Investment Advisory

“We are happy to see the acquisition of these high-quality road assets to the Sekura Roads portfolio. This is in line with our strategy of investing in Infrastructure assets which can deliver predictable long-term yield to our investors. We now have a healthy portfolio of operating transmission and operating annuity road assets,” said Subahoo Chordia, Head of Edelweiss Infrastructure Yield Plus.

Chordia was previously associated with the group’s investment banking business and has spent two decades in the infrastructure sector.
Sachin Bhansali, CFO – Navayuga group, added “Navayuga group is looking to de-leverage its balance sheet and asset monetization is a critical component. This transaction will significantly ease out the debt position of the group and help free up cash.”

Source: moneycontrol

THBL: Karnataka Bank Q4 net profit falls by 56% as provisions and contingencies prepare for bad loans

6 June 2020: Karnataka Bank Ltd registered a net profit of ₹27.31 crore in the fourth quarter of 2019-20 as against a net profit of ₹61.73 crore in the corresponding period of the previous fiscal, recording a decline of 55.76 per cent.

The board of directors of the bank met on Saturday to consider the audited financial result for 2019-20.

The gross NPA of the bank stood at 4.82 per cent during the Q4 of 2019-20 as against 4.41 per cent in the corresponding period of 2018-19. The net NPA was at 3.08 per cent (2.95 per cent) during the period.

Provisions (other than tax) and contingencies increased to ₹356.50 crore during the Q4 of 2019-20 as against ₹217.73 crore in the corresponding period of the previous fiscal.

Quoting Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, a press release said that the financial year just concluded was no doubt challenging but the bank has been able to sail smooth.

He said the operational efficiency has further got momentum. As a result, stressed assets were further moderated during the financial year. The bank also focussed on resilience by improving the PCR (provision coverage ratio). The PCR improved to 64.70 per cent as on March 31 2020 2019-20 from 58.45 per cent as on March 31 2019, he said.

NII

The net interest income (NII) of the bank stood at ₹529.3 crore (₹480.88 crore), and the other income at ₹440.37 crore (₹290.59 crore) during Q4 of 2019-20. The net interest margin (NIM) was at 2.86 per cent (2.87 per cent) during the quarter.

The bank recorded a net profit of ₹431.78 crore for 2019-20 as against 477.24 crore for 2018-19.

“Going forward even though COVID-19 pandemic era is a phase of uncertainties’, the bank is committed to ‘conserve, consolidate and emerge stronger’ by having a conservative approach,” Mahabaleshwara said.

Source: The Hindu Business Line

TNIE: Karnataka Bank reports Rs 285 crore fraud in four loan accounts

6 June 2020: Private sector lender Karnataka Bank has reported to the RBI that it has been defrauded of over Rs 285 crore consequent to loans gone bad to four entities including DHFL. A total of Rs 285.52 crore has been reported as fraud wherein the bank was one of the consortium lenders during 2009 to 2014 to Dewan Housing Finance Corporation Ltd (DHFL), Religare Finvest, Fedders Electric and Engineering Ltd and Leel Electricals Ltd, Karnataka Bank said in a regulatory filing on Friday.

The maximum is owed by DHFL at Rs 180.13 crore, followed by Religare Finvest Rs 43.44 crore, Fedders Electric Rs 41.30 crore and Leel Electricals Rs 20.65 crore.

“DHFL (defaulted entity) dealing with us since 2014 had availed various credit facilities under consortium arrangement wherein, we were one of the member banks. In view of Early Warning Signals (EWS) in the conduct of the account and other developments, the account was red flagged on November 11, 2019.

“The borrowing account was classified as Non-Performing Asset on October 30, 2019 and now, for misappropriation & criminal breach of trust & diversion of funds in the credit facilities extended earlier to the company, a fraud amounting Rs 180.13 crore has been reported to RBI,” Karnataka Bank said.

Likewise, Religare Finvest Ltd (RFL) was dealing with the bank since 2014, availing various credit facilities.

Following classification of this account as non-performing in October 2019 by a consortium member, Karnataka Bank reported to RBI a fraud amounting to Rs 43.44 crore in the credit facilities extended earlier, on account of diversion of funds.

Leel Electricals was classified as NPA account in March 2019 and it reported to RBI a fraud amounting to Rs 20.65 crore in the credit facilities to the company on account of diversion of funds.

“In all the referred three non-performing accounts, necessary provisions have been made in full to be spread across four quarters,” it said.

Fedders Electric and Engineering Limited was reported as NPA in July 2018 by a member bank in consortium, subsequent to which Karnataka Bank reported fraud of Rs 41.30 crore on account of fund diversion.The account has already been fully provided for, it added.

Source: The New Indian Express reported

TOI: PMC Bank case: Chargesheet against five directors, two valuers

6 June 2020: The city economic offences wing (EOW) on Friday filed a 2,000- page chargesheet in the Esplanade court against five directors and two valuers of Punjab and Maharashtra Cooperative (PMC) Bank. The two valuers are accused of giving backdated reports with inflated valuation of properties mortgaged with the bank. This is the third chargesheet in the case.

Those chargesheeted on Friday include five directors, Jasbir Banwait, Balbir Singh Kochar, Surjit Singh Narang, Omprakash Uppal, Brijbhushan Handa and two valuers, Vishwanath Prabhu and Shripad Jere. Four of the accused are bedridden and, hence, could not appear in court. Earlier, a police team led by inspector Kishore Parab had arrested 12 accused and registered offences against them.

On February 5, police had filed the second chargesheet that ran into 12,000 pages in the Rs 4,700-crore bank loan fraud case against BJP MLA Sardar Tara Singh’s son, Rajneet Singh, and six others. In December last year, the police had filed their first 32,000-page chargesheet against five accused in this case.

HDIL group’s managing directors, Rakesh Wadhawan and his son, Sarang, are accused of fraudulently availing loans of more than Rs 6,700 crore and defaulting on them. They were assisted by the bank’s ex-chairman, Waryam Singh, suspended managing director Joy Thomas and bank director, Surjit Singh Arora. All the accused are currently in jail.

HDIL group’s managing directors, Rakesh Wadhawan and his son, Sarang, are accused of fraudulently availing loans of more than Rs 6,700 crore and defaulting on them. They were assisted by the bank’s ex-chairman, Waryam Singh, suspended managing director Joy Thomas and bank director, Surjit Singh Arora. All the accused are currently in jail.

Source: The Times of India

TOI : Will clear all dues of city manufacturers, assures Atlas Cycles

5 June 2020: Ludhiana: Even as bicycle parts manufacturers of Ludhiana are nervous after Atlas Cycles (Haryana), Sahibabad, shut down its plant, the latter have given an assurance that they will clear all dues of city-based cycle parts manufacturers. According to sources in the bicycle industry, the company has several crores rupees pending towards Ludhiana bicycle part factories against the material supplied by them to the company. Now, with company shutting down its plant, Ludhiana businessmen are jittery as they fear about the safety of their payments.

On Thursday, president of the United Cycle and Parts Manufacturers Association (UCPMA) D S Chawla spoke to senior functionaries in the Atlas Cycles (Haryana), Sahibabad, on behalf of Ludhiana industrialists and he has been assured by the company representatives that the payments of suppliers are safe and moreover, the company will start functioning normally after the resolution of a legal matter.

Giving more information to TOI, Chawla said, “On the subject of reports about the permanent closure of the Atlas Cycles (Haryana), Sahibabad, I spoke to very senior officials of the company on Thursday regarding the payments to be made to the Ludhiana vendors. In this connection I also spoke to other officials, including senior functionary N P Singh Rana. I have been informed by all of them this is not a permanent shut down and this is a temporary phase to save day to day expenses of the unit which are in crores (apart from the labour salaries).”

He added, “The company has an ongoing case in the NCLT, hearing on which is due on June 18. The company intends to get permission for sale of land in Sonipat, which is nearly 25 acres. The unconfirmed estimate of the pending dues of the Ludhiana industry are around Rs 100 crore, whereas the value of this land they intend to sell is much more than these dues. After disposing of the land with the permission of the NCLT, the company will have liquid money surplus and they will be in position to pay off all debts.”

“Moreover, the company has made it clear that they do not have any ill intentions of any kind to keep anyone’s dues and once the case is settled, they will resume the bicycle production like before and the bicycle parts manufacturers of Ludhiana will keep getting business from the company like before,” Chawla said.

Source: The Times of India

CNBC-TV18:COVID-19: Lenders can’t drag defaulters to bankruptcy court as govt floats IBC ordinance

5 June 2020: The government, via an ordinance, has amended the Insolvency and Bankruptcy Code to prevent companies that have defaulted from being pushed into insolvency proceedings to prevent persons impacted by COVID-19.

The key laws in the IBC pertaining to this — Sections 7, 9 and 10 — have been suspended as defaults have been rising due to the unprecedented COVID-19 situation.

The ordinance reads that no application for initiation of CIRP will be filed for defaults arising on or after March 25, 2020 for 6 months or up to one year.

The Union Cabinet on June 3 cleared the proposal to suspend the insolvency proceedings under the Insolvency & Bankruptcy Code (IBC) to avoid companies at large from being forced into insolvency proceedings for non-performing assets during the COVID-19 period starting from 25 March.Provisions of Section 10A will not apply for defaults on or after March 25 until the next six months up to one year. The move is on the back of the government giving its nod to the proposal to introduce a new clause — 10A, under section 10 of the Insolvency and Bankruptcy Code (IBC), 2016. The section makes it clear that creditors cannot drag any company to courts/insolvency proceedings.

Source: CNBC-TV18

ICRA: Janatha Fish Meal And Oil Products: Ratings downgraded to [ICRA]BBB- (Stable)/[ICRA]A3

4 June 2020 Rationale: The ratings revision reflects the weakening financial profile of Janatha Fish Meal And Oil Products (JFM) characterised by decline in operating income (OI) in FY2020, coupled with low operating profits and increased debt levels also resulting in weak coverage indicators. The firm’s turnover decline in FY2020 was owing to the low production levels with unavailability of raw fish, coupled with reduction in the realisation rates. ICRA notes that the business continues to remain vulnerable to changes in the climatic conditions that may affect the material availability, impacting the firm’s revenues.

The ratings continue to be constrained by the limited pricing flexibility owing to its presence in a fragmented and competitive industry coupled with commoditized nature of the product. JFM is also exposed to the foreign currency fluctuation risk as it derives about 20% of its revenues from exports. However, the firm benefits from the natural hedge to the extent of its imports. JFM is also exposed to the inherent risks associated with the partnership nature of the business including risk of capital withdrawal and limited ability to raise funds, among others.

The ratings, however, consider the long experience of the promoters in the fish meal and oil products business, the firm’s reputed client base and the proximity of the unit to India’s west coast thereby facilitating easy and timely procurement of raw materials. Going forward, ICRA will continue to evaluate the impact of COVID-19 induced lockdown on the firm’s operations. Although it is currently able to carry out its operations, any adverse developments impacting its supply chain can affects its operations.

Source: ICRA

FE: Debt Rejigging: Jain Irrigation wants easier payment terms

3 June 2020: Jain Irrigation has submitted a proposal to lenders asking they restructure Rs 4,000 crore of loans, sources close to development told FE. The rejigging of debt is expected to be such that the company is allowed to repay the loans over a longer period. The plan has been shared with the rating agencies and State Bank of India (SBI) is likely to convene a meeting of lenders soon once the feedback from the agencies is in.

Lenders, who had earlier signed an Inter Creditor Agreement (ICA), are looking to come up with an out-of-court resolution plan for Jain Irrigation since initiating insolvency proceedings under the IBC is not an option.

On Wednesday, the Cabinet decided to suspend insolvency proceedings under IBC following an announcement made by the finance minister in March.

While some lenders had increased provisions, against the exposure, to 15% in the December quarter, when the account slipped to become a non-performing asset (NPA), others are expected to follow suit in the March quarter, in keeping with the income recognition and asset classification (IRAC) norms.

S&P has downgraded Jain Irrigation Systems to ‘D’ (default grade) for missing interest payments due on February 1, 2020. S&P also said the resolution plan might take longer than expected and the company’s operations will continue to suffer due to a lack of sufficient liquidity to manage its debt servicing and working capital requirements. In October, 2019, Care ratings had downgraded Jain Irrigation to ‘D’, due to a delay in servicing its debt.

Source: Financial Express