ET: NCLAT asks investigative agencies to clarify over JSW Steel’s immunity in BPSL matter

16 January 2020: The National Company Law Appellate Tribunal (NCLAT) has asked the investigative agencies like Enforcement Directorate, SFIO and the CBI to file an affidavit clarifying whether JSW Steel, a successful bidder for Bhushan Power and Steel Ltd (BPSL), is liable for offences committed by the previous management of the debt-laden firm under the amended IBC.

A three-member NCLAT bench headed by Chairperson Justice S J Mukhopadhaya asked the agencies to file their reply affidavits by January 20 stating whether after insertion of section 32 A in the Insolvency and Bankruptcy Code (IBC) last month, JSW Steel has immunity from the alleged fraud committed by the previous BPSL managemet.

“The Directorate of Enforcement and the central government through the Secretary, MCA on behalf of the Serious Fraud Investigation Office (SFIO) and the Central Bureau of Investigation (CBI) are allowed to file additional reply affidavit by 20th January, 2020 stating therein as to whether JSW Steel, whose plan has been approved, are covered by newly inserted Section 32A of the IBC, 2016,” said the NCLAT in an order passed on January 13.

It further said: “In case, the answer is in negative, they will enclose the evidence in support of their stand after serving a copy of the same on the learned counsel for JSW Steel and other appellants.”

The appellate tribunal had directed to list the petition on January 23, for next hearing.

The government had last month amended the Insolvency and Bankruptcy Code (IBC) and inserted section 32A inside it, which mandates that once management or control of a debt-ridden company changes after the completion of Corporate Insolvency Resolution Process (CIRP), it would not be liable for any offences committed prior to the commencement of the insolvency resolution process.

The changes were made after the ED and the Ministry of Corporate Affairs (MCA) went loggerheads over the attachment of the assets of BPSL by the former over the money allegedly siphoned off by the erstwhile promoters of BPSL, which is presently going through insolvency resolution process.

On October 10, the ED had attached assets worth over Rs 4,025 crore of debt-ridden BPSL in connection with its money laundering probe linked to an alleged bank loan fraud by its former promoters of BPSL.

JSW Steel, which has emerged as a successful bidder for BPSL with its bid of Rs 19,700 crore, filed an appeal against ED’s move before the NCLAT, which had on October 14 directed them to be immediately released in favour of the resolution professional of the debt-ridden firm.

Earlier, on October 14, the NCLAT had directed the ED to release BPSL properties attached by the agency on the JSW Steel plea, alleging siphoning off of funds by its erstwhile promoters.

While the ED is of the opinion that it can attach the property of BPSL under the Prevention of Money Laundering Act (PMLA), the MCA has been maintaining that the ED cannot do so as proceedings under the Insolvency & Bankruptcy Code was on.

Earlier, on October 25, the NCLAT had asked both organisations, which are presently headed by Union Finance and Corporate Affairs Minister Nirmala Sitharaman, to settle the matter adding that there was no question of amendment of laws.

On this, the ED filed an affidavit before the NCLAT questioning its jurisdiction.

In the said affidavit, the ED told the appellate tribunal that it has no jurisdiction over the properties attached by the agency under the PMLA and asked it to vacate its earlier order and dismiss the appeal filed by JSW Steel.

The validity of the attachment could be examined by an adjudicating authority only under the PMLA, and hence the NCLAT should vacate its order passed on October 14, directing it to release the assets of BPSL, the ED told the NCLAT.

The Economic Times reported

FE: JSW Steel says can’t implement BPSL resolution plan

18 September 2019: JSW Steel, the highest bidder for Bhushan Power and Steel (BPSL), has informed the National Company Law Appellate Tribunal (NCLAT) that it would be impossible for it to implement the resolution plan for BPSL if it has to share profits earned by the insolvent firm during the resolution period with creditors. The Sajjan Jindal-led company has also expressed concerns over the chances of BPSL’s assets being undermined given it doesn’t have tribunal’ protection against possible attachment of assets for offence committed by the erstwhile promoters.

Challenging NCLT’s September 5 order that approved its `19,700-crore bid for the insolvent firm, JSW said: “The direction in relation to treatment of CIRP Ebitda amounts to modifying the resolution plan in a material manner, without the consent of the appellant (JSW Steel) and imposition of such a condition would make it impossible for the appellant to implement the resolution plan.”

In its order, NCLT had directed JSW Steel to distribute profits earned during the Corporate Insolvency Resolution Process (CIRP) period among financial and operational creditors on pro-rata basis. In the application, JSW Steel has said BPSL’s earnings before interest, tax, depreciation and amortisation (Ebitda) during the CIRP period was factored in as an asset of the company and based on that it had submitted the resolution plan. “In the present matter, the issue of entitlement of CIRP Ebitda was discussed between the appellant and the committee of creditors (CoC) and agreed that the CoC would not have a claim on it and CIRP Ebitda would continue to remain with the corporate debtor,” JSW Steel said.

Also did not gel well with JSW Steel the NCLT’s decision not to grant BPSL protection from penal financial liability and attachment of assets on account of acts of omission or commission of the previous directors under the Prevention of Money Laundering Act (PMLA), 2002. The CBI had on April 5 registered an FIR against the erstwhile directors and the debt-ridden firm for alleged siphoning of thousands of crores of funds borrowed from banks on behalf of BPSL.

Sans such protection, particularly in view of the Delhi High Court judgement that ruled that provisions of the Insolvency and Bankruptcy Code (IBC) do not override the provisions of the PMLA, the basis of the IBC was vitiated. The non-grant of such protection from penal liability and attachment under PMLA and other laws would also defeat the objects of the (IBC) code.

“It is respectfully submitted that in the absence of protection as prayed from attachment and liability resulting from criminal proceedings, the appellant would not be able to implement the resolution plan and the same would be an unviable and unfeasible plan incapable of even being approved under the code,” JSW Steel said.

The Financial Express reported

FE: JSW Steel moves NCLAT over Bhushan Power & Steel assets

14 September 2019: JSW Steel on Friday challenged an order of the National Company Law Tribunal (NCLT) that approved its Rs 19,700 crore bid for Bhushan Power and Steel (BPSL), but did not provide immunity from attaching the insolvent firm’s assets, post-take over, by investigating agencies for recovering Rs 5,580 crore fund digression by erstwhile promoters.

Mentioning JSW Steel’s plea under section 61 of the Insolvency and Bankruptcy Code (IBC) that allows any person aggrieved with the NCLT order to appeal before the NCLAT, senior counsel Kapil Sibal said, “So far as I (JSW Steel) am concerned, my asset is not proceeds of crime. The assets I acquire can’t be taken away.” The two-member NCLAT bench, headed by its chairperson justice S J Mukhopadhaya, has scheduled the matter for hearing on September 16.

In its application, JSW Steel urged, “No penal liability or attachment of assets of the corporate debtor (BPSL) should occur on account of proceedings by CBI or ED for actions taken by the corporate debtor under its previous management prior to take over by JSW Steel.” Based on forensic audit investigation findings, Punjab National Bank and Allahabad Bank had in July this year reported Rs 3,805 crore and Rs 1,775 crore frauds respectively to the Reserve Bank and made a total of Rs 2,800 crore provisions as per the prescribed prudential norms. Both the lenders found that BPSL has misappropriated bank funds, manipulated books of accounts to raise funds from consortium of lenders. CBI filed FIR, on suo muto basis, against BPSL and its directors.

The Sajjan Jindal-led firm, which is slated to become the largest steel company in the country post-acquisition, has also challenged in the NCLAT the conditions imposed by NCLT regarding distribution of profits earned by the company during the corporate insolvency resolution process (CIRP) that started with the admission of Punjab National Bank’s insolvency plea against BPSL on July 26, 2017.

NCLT, in its order, had directed the resolution professional “to redistribute the profits earned by running the corporate debtor (BPSL) during CIRP in accordance with the judgement of hon’ble NCLAT rendered in the case of Standard Chartered Bank Vs Satish Kumar Gupta, RP of Essar Steel Ltd & Ors.”

In the Essar Steel matter, the NCLAT had ordered that the profit earned by Essar Steel during the insolvency resolution period should be distributed amongst all financial and operational creditors on pro-rata basis of their claims subject to the fact that it should not exceed the admitted claim.

However, sources said BPSL did not generate any profit at all during the insolvency resolution period. All it earned was a positive EBITDA (earnings before interest, depreciation and amortisation) of about Rs 1,900 crore. They said after adjusting the EBITDA with depreciation, there will remain no profit and thus, NCLT’s direction on distribution of profits is “infructuous”.

However, JSW Steel did not seek indemnity from statutory dues from authorities under the Income Tax Act, ministry of corporate affairs, department of registration and stamps, Reserve Bank of India and others in its plea before the NCLAT. Rejecting its plea, the adjudicating authority had left the matter for competent authorities to decide.

The Financial Express reported

LM: JSW Steel, lenders to BPSL negotiate better deal terms

11 September 2019: Lenders to Bhushan Power and Steel Ltd (BPSL) have held talks with JSW Steel Ltd, which had won the stressed steel mill bid under the insolvency code, as the acquirer is not entirely happy with the takeover terms cleared by the bankruptcy court.

Banks are trying to improve the final terms for JSW Steel, which had made two key demands, but were not entertained by the Delhi bench of the National Company Law Tribunal (NCLT).

BPSL’s committee of creditors (CoC) met top company executives this week to arrive at the final terms of the takeover, two people aware of the development said, requesting anonymity.

On 5 September, Mint reported that JSW Steel, India’s second-largest private steelmaker, had sought concessions, including protection from the consequences of a fraud investigation into BPSL and discharging statutory liabilities.

JSW can challenge the NCLT decision in higher courts, but that would delay the resolution process further. A member of the CoC, one of the two cited above, said that banks were keen to receive the upfront payment of ₹19,700 crore within 30 days of the NCLT order.

“We’re holding meetings with the company to see what can be worked out,” he said. “JSW primarily wants its assets protected from the CBI investigation, and that is something the CoC cannot offer. But we want the resolution process to close at the earliest.”

JSW Steel has offered ₹19,700 crore in upfront cash to BPSL’s lenders and has agreed to infuse ₹350 crore in the steelmaker to revive it. While the offer was accepted by the NCLT, Sajjan Jindal-led JSW Steel also wanted protection from litigation after the change in control.

JSW had sought protection after a forensic audit revealed potential fraud and diversion of money by its erstwhile promoters. The allegations are being investigated by the Central Bureau of Investigation.

The NCLT also ruled that the operating profits that BPSL earned during its two-year-long resolution period be distributed among the company’s financial and operational creditors. JSW believes, instead, that these profits were part of the company’s assets and should stay with BPSL.

Financial creditors of BPSL, led by the State Bank of India, Punjab National Bank and Bank of India, prefer to finalize the terms that are agreeable to all parties rather than run the risk of more litigation, the second person said.

When contacted, a JSW Steel official said: “We are going through the judgment and, as per our legal input, we will take a call after reviewing the order.”

BPSL operates a 3.5 million tonne (mt) steel plant in Odisha. Under its earlier promoter, Sanjay Singal, the company had accumulated debt of over ₹47,000 crore, including a principal amount of ₹42,100 crore. BPSL was among the Reserve Bank of India’s first list of 12 non-performing accounts referred to the bankruptcy courts under the Insolvency and Bankruptcy Code (IBC) in June 2017. The resolution process has taken over 800 days. On 5 April, the CBI had pegged the BPSL fraud at ₹2,348 crore. After the details of the CBI investigation emerged, PNB informed stock exchanges that the bank’s loans had been misappropriated and the company’s books of accounts manipulated.

The LiveMint reported

FE: JSW may challenge NCLT order on Bhushan Power profits redistribution

7 September 2019: JSW Steel, which won Bhushan Power and Steel (BPSL) at the insolvency court, is likely to challenge the National Company Law Tribunal (NCLT)’s decision to redistribute profits earned during the insolvency resolution period among creditors, while seeking further immunity from ongoing investigations against the bankrupt steelmaker, people aware about the development said.

Sanjay Singhal, erstwhile promoter of BPSL, and other directors are facing probe from multiple agencies including, the Enforcement Directorate (ED), for fraud and siphoning of money.

While the New Delhi Bench of the NCLT on September 5 directed the resolution professional (RP) to redistribute the profits earned by BPSL between July 2017 and August 2019 among all the financial and operational creditors on a pro-rata basis according to the NCLAT order in the Essar case, it said the criminal proceedings initiated against the erstwhile board members and others will not effect JSW Steel or the implementation of the resolution plan.

“We leave it open to the members of the CoC to file appropriate applications if criminal proceedings result in recovery of money which has been siphoned of or on account of tainted transactions or fabrication as contemplated under the various provisions of the Code (IBC) or any other law,” the principal Bench headed by Justice MM Kumar said in the judgment.

However, JSW Steel doesn’t seem entirely convinced with the NCLT’s judgment, considering a Delhi High Court ruling which said that money laundering law prevails over the Insolvency and Bankruptcy Code (IBC).

Justice RK Gauba on April 2, 2019, held: “The objective of PMLA being distinct from the purpose of RDBA, SARFAESI Act and Insolvency Code, the latter three legislations do not prevail over the former. The PMLA, by virtue of Section 71, has the overriding effect over other existing laws in the matter of dealing with “money-laundering” and “proceeds of crime” relating thereto.”

Sources said Sajjan Jindal-promoted steel major could approach the NCLAT seeking more protection after takeover of BPSL. The ED is yet to attach any properties in the Bhushan Steel case.

On Thursday, the NCLT accepted the `19,700-crore bid by JSW Steel for BPSL, with bankers taking a near 60% haircut. Financial creditors will get `19,350 crore while operational creditors will get `350 crore against their admitted claims of `733 crore, a recovery of nearly 48%.

The NCLT’s principal Bench had on July 26, 2017, admitted the insolvency plea of Punjab National Bank against the company. A clutch of 34 financial creditors claimed `47,303 crore from the company as on January 3, 2019. Of that amount, the RP admitted claims worth `47,158 crore. Operational creditors, numbering 1,778, claimed `2,320 crore from BPSL.

The Financial Express reported

FE: JSW Steel’s Rs 19,700 crore bid for Bhushan Power & Steel gets NCLT nod

6 September 2019: Sajjan Jindal-promoted JSW Steel has finally won Bhushan Power and Steel (BPSL) with its Rs 19,700-crore bid having been accepted by the National Company Law Tribunal (NCLT). At this price, bankers will be taking a near 60% haircut. The appellate tribunal on Thursday okayed the bid which would see financial creditors get Rs 19,350 crore while operational creditors will get `350 crore against their admitted claims of Rs 733.76 crore, a recovery of nearly 48%.

The acquisition of BPSL will make JSW Steel India’s biggest steelmaker with a capacity of over 22 million tonne.

BPSL has a capacity of 3.1 million tonne per annum (mtpa). JSW Steel has already taken over another insolvent firm — Monnet Ispat — through the Insolvency and Bankruptcy Code (IBC) route; Monnet has a steel-making capacity of 1.1 mtpa.

“The resolution plan of JSW, H1 resolution applicant, is accepted,” the two-member NCLT bench, headed by its president MM Kumar, said in its 138-page order. The bench also overruled objections raised by erstwhile promoters of the company as well as its operational creditors, both of which were against JSW Steel’s resolution plan.

The NCLT’s principal bench had on July 26, 2017, admitted the insolvency plea of Punjab National Bank against the company. A clutch of 34 financial creditors claimed `47,303 crore from the company, as on January 3, 2019, of which, the resolution professional (RP) admitted claims worth Rs 47,158 crore. Operational creditors, numbering 1,778, claimed `2,320 crore from BPSL.

“JSW is to incorporate or identify a wholly-owned subsidiary and to infuse equity of `8,550 crore into a special purpose vehicle (SPV), which is to be done in accordance with the provisions of the resolution plan and is to merge with the corporate debtor on the effective date,” JSW Steel’s council had informed the NCLT earlier.

The CIRP for BPSL has seen many twists and turns. Though late-entrant Liberty House was in the reckoning for BPSL, the race was primarily one between JSW Steel and Tata Steel. Lenders had on July 9, 2018 selected Tata Steel as the H1 bidder and JSW Steel as the H2 bidder for BPSL.

However, on July 26, 2018 the CoC allowed JSW Steel to submit a revised bid for the steelmaker. Tata Steel challenged the CoC’s decision in NCLAT on July 30, 2018. On August 1, 2018 NCLAT had again allowed submission of revised bids by all three bidders, including the UK-based Liberty House. Following this, on August 13, 2018 JSW Steel further improved its financial bid and chosen as the most preferred bidder, ahead of Tata Steel, for BPSL by the CoC on July 14.

While the Tatas had consistently opposed CoC’s permission for a revised bid, JSW Steel had questioned its objections, saying a financial bid can always be improved upon till the time the bids are voted on. The erstwhile promoters also made a last-minute offer of repaying back financial creditors in full. Sanjay Singal had offered to pay the financial creditors in full and take the company out the CIRP, under section 12 A of the IBC, by converting their entire debt into cumulative redeemable preference shares, payable over 17 years.

The Financial Express reported

ET: JSW Steel seeks immunity from litigation against Bhushan Power

17 July 2019: JSW Steel has sought immunity from future litigations against Bhushan Power & Steel for any illegal activity under the previous management amid reports of alleged bank fraud by former promoters of the troubled company undergoing debt resolution process.

JSW Steel, whose resolution plan under the Insolvency and Bankruptcy Code has been approved by lenders of Bhushan Power & Steel (BPSL), has approached the National Company Law Tribunal for relief in the wake of a series of fraud cases reported by banks including Punjab National Bank and Allahabad Bank against BPSL.

“We have represented to NCLT after PNB and other cases,” a top JSW official told ET on Tuesday. “We have sought relief so that we are not impacted by any litigation. We are waiting for the court order.”

JSW Steel has also asked for a copy of the forensic audit report on BPSL following these cases. PNB had recently reported a Rs 3,800-crore fraud by BPSL by way of misappropriating bank funds and manipulating its books. Allahabad Bank last week reported a Rs 1,774-crore fraud.

The JSW official, speaking on condition of anonymity, however, refuted speculation that the company would cut back its Rs 19,300-crore bid for BPSL due to the fraud cases. “We are not looking at reducing our bid, nor are we exploring the option to withdraw it,” the person said. “We have been pursuing BPSL under the IBC right form the time the resolution process was initiated and we continue to be interested in acquiring the company.”

BPSL was the sixth highest debtor in the Reserve Bank of India’s first list of twelve large defaulters. JSW Steel outbid Tata Steel in the race for the asset which was admitted to NCLT in June 2017. Sanjeev Gupta’s Liberty House, too, was in the race.

BPSL owes more than Rs 47,100 crore to a consortium of 34 lenders led by State Bank of India. While opinion is divided over whether NCLT can provide relief as sought by JSW Steel, the official said the company’s appeal draws strength from Section 238 of the Insolvency and Bankruptcy Code that says IBC overrides all other laws.

According to Ashish K Singh, founder of law firm Capstone Legal, the anxiety of JSW comes from the fact that assets of BPSL may be considered “proceeds of a crime” under the Prevention of Money Laundering Act and other enactments.

The Economic Times reported

BS: Still want Bhushan Power, but reports of fraud a worry, JSW tells NCLT

15 July 2019: JSW Steel on Monday told the National Company Law Tribunal that the company is not backing out from the ongoing resolution process of Bhushan Power & Steel despite reports of alleged fraud by its former promoters.

During the proceedings in NCLT, counsel appearing for JSW Steel informed the tribunal that it was anxious about the alleged fraud reports and needs to know what is going inside Bhushan Power & Steel Ltd (BPSL).

A two member NCLT bench headed by the President Justice M M Kumar asked the Resolution Professional (RP) of BPSL to hand over a copy of the forensic report to JSW Steel.

NCLT said that alleged fraud reports will not have any impact on the insolvency resolution process and JSW’s resolution plan for BPSL.

NCLT has to take a decision over the lenders’ approval of the resolution plan of JSW Steel for BPSL.

Earlier on February 4, the National Company Law Appellate Tribunal (NCLAT) had dismissed the plea of Tata Steel and upheld the Committee of Creditors (CoC) decision to approve JSW Steel’s bid.

The NCLAT had said the CoC decision was well within its rights to negotiate better terms with resolution applicants and has had asked NCLT to decide over JSW Steel’s bid by March 31, 2019.

However, the judgement is still pending before the Principal bench of NCLT.

JSW Steel had revised its offer from Rs 11,000 crore to Rs 18,000 crore and later to over Rs 19,000 crore, whereas Tata Steel’s last offer was at Rs 17,000 crore after it had refused to revise its bid.

Last week, state-owned lender Allahabad Bank had reported fraud of over Rs 1,774 crore by BPSL to the Reserve Bank of India.

Earlier, PNB reported a fraud worth Rs 3,805.15 crore by BPSL by misappropriating bank funds and manipulating its books of accounts.

Around 85 per cent of PNB’s Rs 4,399 crore exposure to the company had been siphoned off.

Investigate agency CBI has already registered complaint in April names several other lenders.

According to the CBI, BPSL diverted around Rs 2,348 crore through its directors and staff from the loan accounts of PNB, Oriental Bank of Commerce, IDBI Bank and UCO Bank into the accounts of more than 200 shell companies without any obvious purpose.

The Business Standard reported

BS: SC stays high court ruling, clears deck for NCLT order on Bhushan Power

3 July 2019: The Supreme Court on Wednesday stayed an order of the Punjab and Haryana High Court in which it had asked the Committee of Creditors (CoC) of Bhushan Power and Steel Limited and the National Company Law Tribunal (NCLT) to consider the objections raised by the former directors of the company before finalising any resolution plan. The directions by the high court were issued despite the Principal Bench of NCLT at New Delhi having already reserved its judgment on a resolution plan for Bhushan Power, submitted by JSW Steel.

On April 18, a former director of Bhushan Power Ravi Parkash Goyal approached the high court with a plea that he had neither been heard by the CoC of Bhushan Power nor been heard appropriately by the lender or the NCLT. The high court, after hearing Goyal’s petition, had directed that Bhushan Power CoC give him a fresh hearing and that the NCLT first decide on the issue of why he was not provided with the resolution plan despite clear orders in this regard from the Supreme Court in other cases. A two judge bench of the high court had also said that any decision taken by the NCLT would be “kept inoperative for two weeks” so as to enable Goyal to challenge it in accordance with law.

Bhushan Power lenders had later challenged the high court’s order in the National Company Law Appellate Tribunal (NCLAT), arguing that the high court did not have jurisdiction to adjudicate on the issue since the NCLT was already hearing the same. While passing its order in the issue, though the NCLAT had refrained from making any comments on the high courts’ order, it had said that the NCLT should pass its judgment in the issue “uninfluenced by any order except the decision of this appellate tribunal and the Supreme Court”.

“The adjudicating authority (NCLT) is supposed to decide the case on merit in accordance with law uninfluenced by any order except the decision of this appellate tribunal and the Supreme Court. While observing so, we are not expressing any opinion with regard to the intervention, which is sought to be made by the ex-directors and promoters of Bhushan Power and Steel Limited,” the appellate tribunal had then said. The NCLAT had, however, expressed its reservation as to how a vacation bench of the high court had passed an ex-parte order and that too without issuing notice to the respondents.

Bhushan Power owes close to Rs 37,248 crore to a consortium of lenders led by Punjab National Bank. It is the sixth out of the 12 large stressed accounts identified by the Reserve Bank of India.

The Business Standard reported

BS: JSW sweetens offer to surge past Vedanta in race for Ind Barath unit

1 July 2019: JSW Energy, part of the Sajjan Jindal controlled JSW Group, has stolen a march over metals and mining titan Vedanta Ltd in the bid to acquire insolvent firm Ind Barath Energy Utkal Ltd (IBEUL), a subsidiary of the Hyderabad-based Ind Barath Power Infra Ltd (IBPIL).

IBEUL has a 700 Mw coal-fired pit-head power plant near Jharsuguda (Odisha). The company has been admitted to the Hyderabad bench of the National Company Law Tribunal (NCLT) under Insolvency & Bankruptcy Code (IBC). Both JSW Energy and Vedanta are in the race to acquire the insolvent firm. 

Initially, both JSW Energy and Vedanta were neck-to-neck in bidding for IBEUL. Both companies offered an upfront amount of Rs 1 crore per Mw. But of late, JSW Energy has sweetened the offer and hiked its upfront offer to Rs 845 crore against Vedanta’s Rs 700 crore, a source familiar with the development said.

The resolution of IBEUL, a stressed power asset is expected to be completed by September this year.

For JSW Energy, the takeover of IBEUL facility sounds strategic since the company is scouting for such portfolios to boost its inorganic growth. While the company is keen to expand its hydroelectric and renewable portfolios organically, it is banking on the inorganic route to build up thermal power. Moreover, JSW Energy does not need external capital to fund its stressed power deals as it has ample internal accruals for such buy-outs. 

The country’s power sector is awash with stressed  assets. The ailing power assets, fired by coal and natural gas, add up to 34 with an installed capacity of over 40,000 Mw and are saddled with debt mounting to Rs 1.74 trillion, according to a report by a Parliamentary standing committee. 

However, the resolution of these assets is beset with challenges since most of them lack firm coal linkages and a long-term power purchase agreements (PPA). In contrast, IBEUL is an attractive bet as it boasts of both. It has coal linkage from Mahanadi Coalfields Ltd (MCL), a Coal India subsidiary and PPAs stitched with the governments of Odisha and Tamil Nadu. 

IBEUL is almost entirely owned by Australia-based asset manager Macquarie Group which has over 99 per cent stake in the company. Paradoxically, it was Macquarie which dragged IBEUL into NCLT in June 2018 owing to a delay in commissioning of the project. In 2015, Macquarie had lent Rs 750 crore to IBEUL against convertible bonds. Two years later, Macquarie is believed to have converted the debt instrument into equity, thus acquiring a majority ownership. IBEUL’s promoters had contested Macquarie’s petition in NCLT, arguing that the investor being a majority shareholder was not eligible to file for insolvency proceedings.

IBPIL, the Hyderabad based diversified power generator and parent company of IBEUL, has 2865 Mw of assets under development in conventional and non-conventional energy.

The Business Standard reported