LM: Moody’s downgrades SBI, HDFC Bank amid bleak outlook for Indian banks

2 June 2020: A day after downgrading the country’s sovereign rating to the lowest level, US-headquartered research and rating agency Moody’s Investor Service, on Tuesday, downgraded both the country’s largest private sector lender HDFC Bank Ltd and the state-owned State Bank of India, citing economic disruption caused by covid-19 outbreak, asset price declines creating severe credit shock across sectors and weakening borrowers’ credit profiles.

Seven other domestic banks saw either their rating or their outlook being negatively revised by Moody’s on Tuesday.

The rating agency announced a rating action on 11 banks. Apart from SBI and HDFC Bank, the nine other banks whose ratings faced an action by Moody’s include Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Export-Import Bank of India (EXIM India), Indian Overseas Bank, IndusInd Bank Ltd., Punjab National Bank and Union Bank of India.

“The rapid and widening spread of the coronavirus outbreak, volatile oil prices and asset price declines are creating a severe and extensive credit shock across many sectors, regions and markets. The Indian banking sector has been affected given the disruptions to India’s economic activity from the coronavirus outbreak, which is weakening borrowers’ credit profiles,” said Moody’s.

On Monday, India’s sovereign credit rating was cut by a notch to the lowest investment grade with negative outlook by Moody’s Investors Service, which cited growing risks that Asia’s third-largest economy will face a prolonged period of slower growth amid rising debt and persistent stress in parts of the financial system.

The country’s credit rating was downgraded to Baa3 from Baa2, according to a statement.

On Tuesday, Moody’s said disruptions from the coronavirus outbreak will worsen the economic slowdown in India that has been underway in the past year and will accelerate a deterioration in the banks’ asset quality and profitability.

The rating agency stated that the stimulus measures announced by the Indian government and the RBI will only help mitigate some of the credit pressures.

“The longer and broader the economic slowdown, the more these banks will face asset quality and profitability issues. At the same time, heightened liquidity stress at non-bank financial institutions will pose a risk to the stability of the broad financial system, given banks’ large direct exposures to these entities,” said Moody’s, adding that it expects the standalone credit profiles of most state-run banks to deteriorate.

Also, in the absence of external capital support from the Indian government, Moody’s expects the capitalization of the PSBs to deteriorate.

In Moody’s opinion, the state-run banks’ asset quality and profitability will also deteriorate due to rising loan delinquencies and defaults due to the coronavirus outbreak, which will result in an increase in credit costs.

However, most private sector banks have better loss absorbing capacity than their state-run peers because of stronger capitalization and loan loss reserves.

Moody’s has downgraded the long-term local and foreign currency deposit ratings of HDFC Bank and SBI to Baa3 from Baa2. EXIM’s long-term issuer rating has been downgraded to Baa3 from Baa2.

Moody’s maintains the rating outlooks of the three banks as negative.

Moody’s said the downgrades of HDFC Bank and SBI echo the sovereign rating of India since the rating agency assumes that the two banks will receive government support in times of need.

HDFC Bank reported total assets of Rs.15.3 trillion at 31 March 2020, while State Bank of India had total assets of Rs. 37.5 trillion at 31 December 2019.

“HDFC Bank and SBI’s ratings are unlikely to be upgraded in the next 12-18 months. Nevertheless, the rating outlook could be changed to stable if India’s rating outlook is stabilized,” said Moody’s.

Alongside, Moody’s has placed the “Baa3″ long-term local and foreign currency deposit ratings of Bank of Baroda, BOI, Canara Bank and UBI and their baseline credit assessment rating of “Ba3″ under a review for downgrade.

The review for downgrade reflects Moody’s expectation that the forward-looking improvements to these three bank’s credit profiles will be more difficult in the current environment, said the rating agency.

Bank of Baroda, headquartered in Mumbai, reported total assets of Rs.10.9 trillion at 31 December 2019. Bank of India had total assets of Rs.6.3 trillion, Canara Bank had assets of Rs.7.2 trillion and Central Bank of India reported total assets of Rs.3.5 trillion at 31 December 2019. Mumbai-headquartered Union Bank of India had assets of Rs.5.3 trillion at 31 December 2019.

Private lender IndusInd Bank’s long-term local and foreign currency deposit ratings too have been downgraded to “Ba1″ from Baa3 and its baseline credit assessment rating to ba2 from ba1.

Moody’s has also put its rating outlook as negative for IndusInd Bank.

The bank’s downgrade incorporates the risks to bank’s asset quality and profitability, said Moody’s.

The rating outlook of Punjab National Bank too has been downwardly revised to stable from positive by Moody’s, while the state-run lender’s long-term local and foreign currency deposit ratings at Ba1 has been affirmed.

Only in the case of Central Bank of India and Indian Overseas Bank, the rating agency has affirmed their long-term local and foreign currency deposit ratings at Ba2, while maintaining their rating outlook as stable.

In the case of CBI and IOB, Moody’s expects the asset quality and profitability pressures due to the coronavirus outbreak will be largely mitigated by the improvements in the banks’ credit profile over the past year.

The rating agency has downgraded the counterparty risk rating and counterparty risk assessment of HDFC Bank, PNB, CBI and IOB.

Source: LiveMint

DNA: BoB to sell Rs 8,906 cr NPA a/cs, including RCom, Alok

12 September 2019: Bank of Baroda (BoB) has set aside Rs 8,906.73 crore of non-performing assets for sale to the asset reconstruction companies or banks in a bid to clean up its books as it tries to grow as a merged entity.

On April 1, 2019, Bank of Baroda merged with two other state-owned banks, Dena Bank and Vijaya Bank.

The majority of the assets shortlisted for sale include corporate accounts from Rs eight crore right up to Rs 2,104.61 crore loan to beleaguered telecom company Reliance Communications, which had promised to repay the bank after a deal with Reliance Jio that did not fructify.

ASSETS ON SALE

  • Rs 2,104.61 cr – loan to Reliance Communications 
  • Rs 903.45 cr – Alok Industries
  • Rs 548.47 cr – Gammon India
  • Rs 266 cr – GVK Power Gondiwal
  • Rs 265 cr – Amtek Auto
  • Rs 159 cr – Lanco Solar
  • Rs 710 cr – Net profit reported by the bank in Q1
  • Rs64 – Corporate loan accounts BoB has put on sale

The other accounts the bank has showcased for sale is steel company Alok industries with a debt of Rs 903.45 crore, Gammon India with an unpaid debt of Rs 548.47 crore, GVK Power Gondiwal which has unpaid loans of Rs 266 crore, Amtek Auto with a loan of Rs 265 crore and Lanco Solar with a loan outstanding of Rs 159 crore. The bank has put on sale 64 corporate accounts.

The bank has notified that the interested bidders need to submit expression of interest (EoI) with an indicative price and likely terms and conditions. It also said that the bank will retain charge of securities on the non-fund based exposures. If in case the non-funded exposures get crystallised the portion that gets converted into a funded exposure will be sold to the ARC.

Banks have been shedding their corporate loans after the resolutions through the National Company Law Tribunal is taking time with some cases like Essar Steel languishing in the bankruptcy courts for nearly two years.

The bank’s exposure in accounts under first NCLT list was Rs 5,820 crore and the second NCLT list was at Rs 6,957 crore as on June 30, 2019.

Bank of Baroda reported a profit of Rs 710 crore for the first quarter for the merged entity compared to a loss of Rs 49 crore in the same period last year on the back lower provisions.

Gross NPAs of the merged bank at the end of the first quarter were Rs 69,714 crore while fresh slippage for the quarter was at Rs 5,583 crore.

Domestic advances grew by 5.18% to Rs 5,33,054 crore as on June 30, 2019 from Rs 5,06,779 crore a year ago. The increase was led by retail loans, which grew by 20.54%. Domestic deposits stood at Rs7,85,861 crore as on June 30, 2019, up 8.87% over Rs 7,21,885 crore as on June 30.

The DNA India reported

IE: Supreme Court cancels registration of Amrapali group for diverting homebuyers’ money

23 July 2019: The Supreme Court Tuesday cancelled the registration of all Amrapali group of companies under the Real Estate Regulatory Authority and the lease of its properties granted by Noida and Greater Noida authorities. The court also asked the Enforcement Directorate to conduct a detailed investigation against the group for diverting homebuyers’ money.

A bench of the Supreme Court headed by Justice Arun Mishra directed National Buildings Construction Corporation (NBCC) to complete the unfinished housing projects in Noida and Greater Noida and handover these to homebuyers.

The top court said Venkataramani will have the power to enter into any tri-party agreement for sale of the group’s properties to recover the dues. The bench said the home buyers’ money was diverted in violation of the Foreign Exchange Management Act (FEMA) and the foreign direct investment (FDI) norms.

The court has been dealing with a batch of petitions filed by home buyers who are seeking possession of around 42,000 flats, booked in projects of Amrapali Group. The company is responsible for the diversion of home-buyers’ money.

Amrapali faced its first major protest in 2015, when 900 families that had shifted to its Sapphire housing project in Noida complained of lack of utilities like electricity and water. In August 2016, cricketer MS Dhoni quit from his role as brand ambassador, with Sharma calling it a “mutual decision”. But two years later, Dhoni sued the group for Rs 150 crore, claiming he had not been paid for his role.

In September 2017, a bench of the National Company Law Tribunal initiated insolvency proceedings at the behest of Bank of Baroda against Amrapali Infrastructure for dues over Rs 50 crore. Following protest after protest in 2016-17, homebuyers of Amrapali’s Dream Valley project, comprising 11,000 unfinished flats, moved the Supreme Court against the decision, saying their interests wouldn’t be protected if insolvency proceedings are initiated.

In August 2018, the Supreme Court attached properties and accounts of 41 companies under the parent Amrapali Group. A month later, the apex court directed the debts recovery tribunal to begin the process of selling 16 of its properties.

In October 2018, the court sent three Amrapali directors — Sharma, Shiv Priya and Ajay Kumar — to police custody for not furnishing details of the 46 companies. “You are playing hide and seek. You are trying to mislead the court,” the bench said.

The Indian Express reported

BT: Union Bank classifies Suzlon Energy’s loan account as NPA; other banks may follow suit

22 July 2019: Wind turbine major Suzlon Energy Ltd’s financial woes continue to mount. A week after defaulting on the payment of outstanding bonds worth Rs 1,182 crore, its loan account with the Union Bank of India has been classified as a bad loan. The Tulsi Tanti-led company had reported a net loss of Rs 6,494 crore in the March quarter on a standalone basis.

Sources in the know told Mint that Union Bank updated the status of the account as non-performing in the RBI’s Central Repository of Information on Large Credits (CRILC) database in the quarter ended June 30, after repayments were delayed by over 90 days. CRILC is a borrower level supervisory dataset with a threshold in aggregate exposure of Rs 50 million. Worse, the buzz is that more banks are likely to follow suit as the stressed wind turbine maker struggles with its debt pile. The company boasted a consolidated net term debt of Rs 7,761 crore and a working capital debt of Rs 3,380 crore by the end of FY19.

The domino effect

“While Union Bank’s exposure is a little over Rs 70 crore and not that large, it will be incumbent upon other members of the consortium to declare it an NPA as well,” a source told the daily. Other lenders to Suzlon Energy include Bank of India, Bank of Baroda, Central Bank of India, IDBI Bank and Punjab National Bank. The NPA tag by Union Bank will force these other banks to set aside money to cover potential losses on their respective exposures. Under the RBI’s asset classification guidelines, banks have to set aside 15 per cent of their outstanding loans to an NPA account as provisions against a mere 0.4 per cent for standard accounts.

Other defaults

Last Wednesday, the Pune-based company announced defaulting on its bond payment and initiated work on a resolution plan amid talks with Canadian investment major Brookfield Asset Management to sell a majority stake. Notably, discussions are on between Suzlon and Brookfield for a one-time settlement plan with creditors to restructure outstanding bank loans, and Brookfield may come up with a binding offer by the end of this month.

Before this, the company had defaulted on its foreign currency convertible bonds (FCCBs) worth $221 million (Rs 1,517.8 crore) in October 2012 despite failed attempts with FCCB holders for a four-month extension. The company faced a similar crisis of the shortage of working capital to execute a large pipeline of orders (then nearly $7.7 billion and a majority of orders were from the sold-off subsidiary REpower). It had posted losses for three consecutive years. Despite a few paybacks, the company’s debt had swelled to over Rs 10,000 crore. That forced the company to seek a bailout from lenders via Corporate Debt Restructuring (CDR).

How did Suzlon reach this point?

The downfall of Suzlon, which grew as the world’s fifth largest wind turbine maker with revenues of over Rs 26,000 crore in 2008-09, is a classic case of aggressive global expansion without reading future business prospects. The 2008 global financial downturn sucked away a lot of the company’s fortunes and though it managed to subsequently recover and once again manage a strong order book, the global financial slowdown in 2018 again threw a spanner in the works. Soon raw material prices, including steel prices, rose and many orders were postponed.

The shift to auction-based capacity additions – from the earlier system of feed-in tariffs – and the resultant disruption to the market also caught Suzlon Energy, as well as other stakeholders, off-guard. As a result of the change, wind capacity additions in India dropped to multi-year low of 1,523 MW in the last fiscal, down over 72 per cent from 5,500 MW in FY17. Suzlon Energy’s debt binge and its inability to move in time on stake sales and asset monetisation to reduce the debt pile, only made matters worse.

The company now has to worry about its looming debt schedule – in FY20, Suzlon has to pay back Rs 1,928 crore, Rs 835 crore in FY21, Rs 926 crore in FY22 and Rs 4,483 crore in FY23 and beyond.

As reported on BusinessToday

ET: BoB-led lenders, JBF Industries to sign inter-creditor pact

18 July 2019: Lenders led by Bank of Baroda have decided to sign an inter-creditor agreement with Kohlberg Kravis Roberts & Co backed JBF Industries under a June 7 circular issued by the Reserve Bank of India, said two people familiar with the development.

Bank of Baroda had filed an insolvency resolution petition against the maker of polyester-based products at the Ahmedabad bench of the National Company Law Tribunal in September. However, the plea is yet to be admitted by the dedicated bankruptcy court. The tribunal posted the hearing for the case for August 27.

“Majority of the lenders signed the ICA last week. Though not all the lenders have signed, we expect that to happen,” said a banker privy to the case. “After everyone signs, we will get 180 days to chalk out a possible resolution plan.”

Sanjay Asher, the partner at law firm Crawford Bailey & Co who is advising JBF Industries, refused to divulge details since the matter is sub judice. A company spokesperson declined to comment.

Email queries to KKR and Bank of Baroda remained unanswered till the time of filing the story. The company’s standalone borrowings stood at Rs 1,623 crore as of March, while its liabilities were about Rs 1,000 crore.

According to the RBI circular, lenders must enter an ICA during the review of the borrower account within 30 days of the first default to any lender.

The new framework lays down parameters to be included in the ICA, including decision-making by lenders holding 75% by the value of total outstanding facilities and 60% by number, and protection of dissenting lenders.

KKR agreed to invest $150 million for 20% in JBF Industries and its overseas arm JBF Global Pte in July 2015. Subsequently, the company said in an exchange filing in August that KKR Jupiter Advisors, a unit of the PE’s credit arm, would acquire 100% of JBF Petrochemicals.

The Economic Times reported

Zeebiz: Banks under PCA framework to be barred from buying retail assets of NBFCs

12 July 2019: State-run lenders currently under the RBI`s Prompt Corrective Action (PCA) framework on account of bad loans and heavily loss making banks may not be allowed to buy the pooled retail assets of non-banking finance companies (NBFCs) under the scheme announced in the Budget, official sources said, which may leave space for only SBI, Canara Bank, Bank of India, Bank of Baroda to make such purchases.

In the Budget 2019-20, the Centre has allowed a one-time, partial credit guarantee of six months to public sector banks (PSBs) on their first loss of up to 10 per cent for purchase of high-rated pooled NBFC assets of Rs 1 lakh crore. 

This is likely to provide the better-run NBFCs access to liquidity. The partial credit guarantee from the government would help NBFCs raise funds from PSBs, providing them urgently needed funding support . 

They PSBs will be allowed to buy only `AAA` rated retail assets and those a notch below, the sources said. They, however, have their own non-performing assets (NPAs or bad loans) issues and have just started to slowly come out of their bad loan situation but are still not out of the woods. 

While the eligibility norms for PSBs to buy such assets are still to be issued by the Reserve Bank of India (RBI), the Finance Ministry and RBI will ensure that banks currently under lending restrictions under the PCA, or non-PCA banks incurring huge losses and still have an asset-liablity mismatch, will not buy the NBFC retail assets, according to informed sources here.

In a move to help both the NBFCs and PSBs, the RBI had also announced a scheme allowing banks to borrow from the central bank by pledging their excess government bond holdings to fund the purchase of NBFC assets, which can release liquidity of up to Rs 1.34 lakh crore. 

Bank of Baroda reported narrowing its losses down to Rs 991.37 crore in the January-March quarter from Rs 3,102.34 crore in the corresponding quarter last year. Punjab National Bank posted a loss of Rs 4,750 crore for the last quarter of the fiscal ending March 2019. 

The State Bank of India (SBI) posted a net profit of Rs 838 crore in the March quarter against a loss of Rs 7,718 crore in the same period a year earlier. While Central Bank of India`s fourth quarter loss widened to Rs 2,477 crore on high provisioning, the Canara Bank loss in the same quarter narrowed to Rs 551 crore on lower bad loans. 

Bank of India returned in the black after two quarters by posting a profit of Rs 252 crore for the quarter ended March 31, against a loss of Rs 3,969 crore during the same period last year. 

The Modi government recapitalised state-run lenders with Rs 1.6 lakh crore in 2018-19, the highest ever so far. The move helped five banks come out of the PCA framework. 

In her maiden Union Budget presented last week, Finance Minister Nirmala Sitharaman announced a Rs 70,000 crore capital infusion into PSBs in an effort to boost credit. Only five of these — United Bank of India, UCO Bank, Central Bank of India, Indian Overseas Bank and Dena Bank — now remain under the PCA framework.

A year after a series of defaults by Infrastructure Leasing and Financial Services (IL&FS) forced the government to intervene, the problems of India`s NBFCs are entering a new phase, which poses a new challenge for the RBI. 

India`s financial regulator in its latest Financial Stability Report has spelt out its concerns about the implications of the country`s spreading shadow banking crisis, saying any failure among the largest of the NBFCs could cause losses comparable to a collapse among commercial banks.

As reported on Zeebiz

ET: Banks expect Adlabs resolution before Sept outside NCLT

2 July 2019: The Union Bank-led consortium of 13 banks is hopeful of finding a resolution for their Rs 1,100-crore exposure to Adlabs Entertainment before September outside the NCLT either by selling their distressed loans to ARCs or finding an investor, two sources familiar with the development said.

The bankers, however, are more hopeful and keen on selling their loans to asset reconstruction companies, and a loan auction is likely to begin shortly, said the sources.

It can be noted that while Tourism Finance Corporation had moved the Mumbai NCLT last September to recover its Rs 46 crore dues from the company, state-run Corporation Bank had filed for bankruptcy in early June to recover its Rs 80-crore loan. However, the bankruptcy tribunal has not approved both these pleas as 11 other banks are not keen on a bankruptcy process.

This has renewed the hope of other 11 lenders to find a resolution, said a banker. The bankruptcy laws demand 75 percent of the lenders consent for a plea to be admitted for insolvency proceedings.

Apart from Union Bank, Adlabss bankers include Bank of Baroda, Indian Overseas Bank, Bank of India, Central Bank, Syndicate Bank, Punjab & Sindh Bank and Jammu & Kashmir Bank among others.

The lenders to the Manmohan Shetty-owned company that runs the countrys first theme park Imagica near here on the Mumbai-Pune Expressway along with a 5-star hotel are at advanced stage of discussions for an out-of-court settlement, which includes selling their loans to an ARC or finding a financial investor a buyer for a majority stake from the popular Hindi film producer Shetty who owns 32 percent in the firm. The rest of the stakes in the company are with the public.

We are in the process of soliciting consent from other 11 banks to sell our loan exposure collectively to an investor or an ARC, said the banker cited above.

When contacted a senior official at Union Bank, which is the lead lender with an exposure of Rs 240 crore to the company, confirmed to PTI that “they are at an advanced stage of discussions with all interested parties,” but refused to share details.

Adlabs refused to confirm or deny the developments, saying, the management is in active conversation with the lenders to find a resolution outside the bankruptcy tribunal.

There have been reports that asset reconstruction company Arcil has expressed interest in taking over the debt. In fact, Arcil along with its hedge fund partner Avenue Capital has submitted a proposal to the creditors to take over the stressed loans.

Union Bank had in January appointed financial consultant BDO to advice it on the loan sale, while the company has roped in Imap India to advise it on a debt resolution.

Another source said the company is in negotiations with some financial investors led by Shaan Agro & Reality India which already owns a 7.85 percent in Adlabs. Another investor who has shown interest is Catalytic Solutions & Management Services, floated by Ashutosh Maheshwari, who was earlier with Rabobank and Motilal Oswal.

This consortium is keen on rescuing the company, though it isnt yet clear whether it would buy the remaining equity or partner with Shetty for a one-time settlement with creditors, the source said.

Apart from the theme park spread over 130 acres at Khopoli and the 287-key Novotel hotel nearby, Adlabs has a 204-acre land parcel nearby which it has been trying to sell for long but landed in a legal tangle.

The Imagica runs a waterpark, an indoor snow-based theme park and Bollywood theme park apart from rollercoasters. The Novotel hotel is 70 percent-owned by Paris-based hotel chain operator Accor group.

In FY18 it had signed a term sheet with big bull Radhakishan Damanis Bright Star Investments for the hotel, along with a 6.1 acre underlying land and an additional 2.9 acres for over Rs 215 crore, but the deal did not go through as banks refused to give their consent for the deal.

The Adlabs counter closed 2.34 percent up on the BSE at Rs 5.25 as against a 0.33 percent gains on the benchmark.

The Economic Times reported

LM: Bank of Baroda buys ₹3,000 crore DHFL loans

30 June 2019: Bank of Baroda (BoB) has entered into a transaction with Dewan Housing Finance Corp. Ltd (DHFL) to acquire loans worth ₹3,000 crore against its exposure to the non-bank lender, even as a lenders’ consortium to the stressed non-bank lender considers a resolution plan, two people aware of the development said.

BoB acquired the pool of loans made by DHFL and adjusted it against its loans to the non-bank lender, the people said, requesting anonymity. Since the acquired loans are higher-rated assets, the quality of BoB’s loanbook will improve.

“Now DHFL will only act as a collection agent for the bank for these loans. The bank will keep around 85-90% of the repayments to itself and the rest will go to DHFL,” one of them said.

Since BoB had an exposure of close to ₹6,500 crore to DHFL, this will be pared by a little less than ₹3,000 crore, the second person said.

“Securitization of assets often happens, but what is different in this case is that the borrower, instead of using the money for liquidity needs, is using it to cancel future term loan repayments,” a banking analyst said on condition of anonymity.

Purchases of loan pools by banks help inject liquidity into non-bank lenders. Banks often buy loans from shadow lenders comprising securitized retail loans to meet priority sector lending shortfall.

State Bank of India (SBI), the country’s largest lender, has an exposure of about ₹10,000 crore to DHFL, the bank’s chairman, Rajnish Kumar, told shareholders at its annual general meeting in June.

Other lenders to DHFL include Bank of India, Central Bank of India, Andhra Bank, Canara Bank, Punjab National Bank and Corporation Bank.

As of December, the non-bank lender had an outstanding debt of ₹1 trillion, of which 38% was in the form of bank loans, 47% from debt markets and 10% through deposits.

Emails sent to DHFL and BoB seeking comments remained unanswered till press time.

“This transaction has not been done as a consortium, but was only between Bank of Baroda and DHFL,” the second person said.

News agency PTI reported on Friday that lenders would take a call on their exposure to the stressed NBFC sector in the light of the Reserve Bank of India’s 7 June circular, which laid down guidelines for resolution of bad loans. “Resolution of any stressed assets either of NBFC or any other sector will be as per the June 7 guidelines of the RBI,” the report cited Kumar as saying.

On 4 June, DHFL delayed interest payment on non-convertible debentures worth ₹850 crore, following which its credit rating was downgraded to default by rating agencies Crisil and Icra. DHFL subsequently was able to make the interest payment within a seven-day grace period given by the bond holders.

On 25 June, DHFL said in a regulatory filing that it was yet to repay ₹225 crore of the total ₹375 crore worth of commercial paper to 12 investors. Since September, DHFL has met liability obligations of over ₹41,000 crore, it said in the same filing.

Mint reported on 20 June that DHFL sold ₹2,000 crore worth of its loan portfolio to offshore investors in a transaction led by SC Lowy, a banking group based in Hong Kong, citing two people aware of the development.

Since December, it has also sold stakes in several of its strategic assets, including affordable housing arm Aadhar Housing Finance Ltd, educational loan business Avanse and DHFL Pramerica Asset Managers. In January, it sold ₹1,375 crore of wholesale loans to foreign alternative investment management fund Oaktree Capital, which buys distressed loan portfolios at a discount.

As of 31 March, DHFL’s promoters include Wadhawan Global Capital Ltd (37.3%), Aruna Rajeshkumar Wadhawan (0.76%), Dheeraj Rajeshkumar Wadhawan (0.57%) and Kapilkumar Wadhawan (0.57%).

The LiveMint reported

BT: Lenders approve JSW Steel’s bid to acquire stressed ACCL for Rs 1,500 crore

30 June 2019: The SBI-led committee of creditors of Asian Colour Coated Ispat Ltd (ACCL), which has an outstanding debt of over Rs 5,000 crore, has approved JSW Steel’s Rs 1,500-crore bid to acquire the stressed steel company. Most of the money will go to financial creditors. Top lenders of debt-ridden ACCl include the State Bank of India, Bank of Baroda, Punjab National Bank and IDBI Bank. Some other banks and financial institutions also have exposure to the company.

ACCL had filed for insolvency in July 2018 after the National Company Law Tribunal (NCLT) admitted a resolution application filed by the State Bank of India-led consortium. As per PTI, a report submitted by Resolution Profession Kuldip Bassi, who was supported by Ernst & Young, had confirmed ACCL’s admitted debt at Rs 6,500 crore. Over 80 per cent of the committee of creditors voted in favour of the JSW Group bid.

Asian Colour Coated Ispat Limited (ACCIL) has manufacturing facilities across three strategic locations in close proximity to Delhi and Mumbai and caters to markets across the Gulf, Europe, Africa, Latin and North America besides India.

The action continues unabated in the steel industry. In July 2018, JSW Steel and AION Investments Private II Limited had acquired cash-strapped Monnet Ispat and Energy Limited — one of the twelve corporate defaulters listed by the Reserve Bank of India for heavy loan defaults — through the NCLT resolution process for Rs 2,850 crore. Sajjan Jindal-led JSW Steel had reported a sharp fall of 48 per cent in consolidated net profit at Rs 1,495 crore for the fourth quarter ended March 31, 2019, due to increase in expenses. 

The BusinessToday reported

AG: India’s first medical SEZ awaits liquidation

28 June 2019: The country’s first medical Special Economic Zone and first Basic Medical Science Park capable of putting India on the global map of medical research and biotechnology will soon die even before becoming fully operational, thanks to the apathy of the banking system and their inability to understand the requirements of gestational scientific research projects.

The project envisaged by Padma Sri Dr. K. M. Cherian, the veteran cardio-thoracic surgeon credited with the country’s first bypass surgery, is staring at impending liquidation.

Most activities, including breakthrough researches, have come to a halt as the banks declined to accept the one-time settlement offered by Tamil Nadu government to salvage the project. Without considering a proposal to lease labs and plots to biotech companies for revenue generation, banks have gone ahead with the insolvency process.

The Frontier Mediville project spread across 356 acres, 45 km off Chennai, was initially planned to be a Rs 1,000-crore project that will have a Basic Medical Science Park for research activities, a Bio-Hospital, a Sterile Bio-medical Corridor for producing medical consumables, disposables and pharmaceutical products and a 1,000-bed Medical University and Research and Training Centre among other related facilities.

Out of this, a 41-acre area was granted the Special Economic Zone status to conduct research in basic and applied sciences, tissue based products, pre-clinical animal studies and clinical studies apart from medical and biotechnology courses in 2010.

The same year, State Bank of India and Bank of Baroda sanctioned a total term loan of Rs 90 crore, of which Mediville drew Rs 38 crore from SBI and Rs 40.47 crore from BoB.

Rajasthan Venture Capital Fund (RVCF) had invested Rs 15 crore and picked up 11 per cent stake in the company. The Technology Development Board has a 16.56 per cent stake and the Tamil Nadu Industrial Development Corporation too has a small share. In total, Rs 227 crore has been invested in the project.

In 2013, the project was declared a non-performing asset. The company claims it has paid back over Rs 20 crore.

While the banks went ahead with the insolvency plan and fixed the liquidation value at Rs 134 crore, Tamil Nadu government offered to revive the project by providing a one-time settlement of Rs 70 crore to the banks, converting Mediville into a Medical City and putting up a community hospital on the premises.

However, banks did not accept the offer. The bank officials did not respond when Financial Chronicle contacted them.

The company tried to raise money by leasing out plots and labs for biotechnology and pharmaceutical companies. “We had developed 25 acres as Bio Enterprise Zone, which could be leased out to biotech, pharma and medical devices companies. We could have generated revenue of Rs 56.75 crore on leasing the plots and Rs 7.4 crore by leasing bio-labs. We had received concrete proposals from a few companies as well. However, the banks did not issue NoC for this proposal,” rued Dr. Cherian.

Kiran Majumdar-Shaw, CMD of Biocon, feels that gestational projects should seek venture funding and not debt funding by banks. “Debt financing does not understand what venture funding is all about. All these kinds of gestational businesses take seven to eight years before they show any signs of commercialisation. Venture funding in life science is not adequate in India because the risk-reward is gestational. It is unfortunate that we are losing opportunities to create value through research-led businesses,” said Shaw.

Mediville has been undertaking several path-breaking researches, the fate of which is in a limbo. It had collaborated with Georgia Tech, Atlanta, University of Minnesota and Central Leather Technology Research Institute to develop indigenous bio-prosthetic heart valve using shark’s skin.

The project to produce BiQ Heart – pumpless self powered cardiac assist low cost device- with the collaboration of QHeart, Australia, has been stalled for want of funds.

Similar is the case of artificial mechanical heart project with Russia’s Sputnik and its miniaturization project with Titan. The Sputnik heart would cost a fourth of the artificial heart made in the US.

Amplification of red blood cells and creation of artificial platelets using nano-technology are among the several path-breaking researches done at the project.

“I need around Rs 200 crore to salvage the project. But adequate funding sources for long-gestation researches are not available in India…the approval processes are time-consuming. No wonder, we are ranked below Kenya in terms of scientific research,” said Dr. Cherian. He fears that his dream project will get converted into a real estate project after the insolvency process.

The Asianage/Financial Chronicle reported