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

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

LM: More banks likely to have been singed by Bhushan Power fraud

8 July 2019: More lenders to bankrupt Bhushan Power and Steel Ltd may say that the company misappropriated funds given to it after state-run Punjab National Bank first reported a ₹3,800 crore fraud, a top bank official said, requesting anonymity.

On Saturday, Punjab National Bank (PNB) disclosed to stock exchanges that it had detected that 85% of its exposure to bankrupt steel mill had been siphoned off and that Bhushan Power had misappropriated bank funds and manipulated account books.

“The forensic audit was initiated by SBI (State Bank of India) and they discussed it with other lenders,” Sunil Mehta, managing director and chief executive of PNB, said in an interview on Monday.

So far, apart from PNB, no other lender to Bhushan Power has reported a fraud related to the company. While PNB’s total exposure is at ₹4,399 crore, more than 85% of it has been classified as fraud, as admitted by the bank in the regulatory filing.

A complaint registered on 5 April by the Central Bureau of Investigation (CBI) pegged the fraud at Bhushan Power at ₹2,348 crore; PNB has now disclosed that the fraud is bigger at ₹3,805.15 crore.

“One year ago, the government had given us all a direction that all non-performing accounts (NPAs) beyond ₹50 crore should go through a forensic audit and be declared as a fraud wherever necessary. (Bhushan Power) is an old NPA and is at an advanced stage of resolution. SBI has the largest share here. We decided to disclose it to the stock exchanges as a matter of extra precaution and also because our exposure is substantial,” said Mehta.

The CBI first information report (FIR) on Bhushan Power could have nudged the forensic audit to reach its conclusion, said a banker who is part of the loan consortium.

Although forensic audits are commissioned in all accounts once they are referred to the National Company Law Tribunal (NCLT), these are inconclusive in most cases, the banker said on condition of anonymity.

Other lenders of the consortium may also be affected because 33 lenders have exposure to Bhushan Power.

“Once an account is reported to be fraudulent to the Reserve Bank of India (RBI), the bank has to fully provide for it and set aside money equal to the outstanding loan to the borrower,” explained the banker.

Bhushan Power is one of the 12 large loan accounts that lenders referred to NCLT following a nudge from RBI.

Meanwhile, JSW Steel, the highest bidder for bankrupt Bhushan Power, will stick to its final bid of ₹19,700 crore for the company in the wake of recent fraud allegations at the company. “JSW Steel might decide to alter its bid in the future, if more information is revealed about the nature of the fraud,” the first person cited earlier said. “At this moment, the company has not made a decision about this. But if there are chances of additional liabilities being imposed on the bidder in future, then JSW might choose not to go ahead with the acquisition.”

JSW Steel made the highest bid for Bhushan Power, with an upfront cash payment of ₹19,350 crore to the lenders and an equity infusion of ₹350 crore to revive the steel mill’s operations. Bhushan Power owed ₹47,204 crore to its lenders as of 30 January 2018. The bid is awaiting NCLT approval. Last week, the Supreme Court stayed an order by the Punjab and Haryana high court and urged NCLT to complete the resolution process.

“Allegations of fraud in some accounts under IBC (Insolvency and Bankruptcy Code) is not new,” said Babu Sivaprakasam, partner at Economic Laws Practice. Also, recent transactions of such nature will be revealed during insolvency process through forensic audit. Simultaneous criminal proceedings will not affect the resolution under the IBC process in general. This legal position is upheld by NCLAT (National Company Law Appellate Tribunal) and by the Bombay high court as well.”

“I believe what the bidders will look for is that they are getting clean, unencumbered property, which won’t be subject to investigation or claims later, like under the Prevention of Money Laundering Act (PMLA),” Sivaprakasam said. “They will want to be sure that the assets are not tainted and the title and ownership will not be challenged at a future date, especially post the recent judgement of the Delhi high court on the overriding effect of PMLA over IBC.”

An email sent to Bhushan Power’s resolution professional Mahender Kumar Khandelwal did not elicit a response till press time. JSW Steel declined to comment.

Under RBI guidelines, bank frauds should be reported to the central bank within three weeks from the date of detection. The provisions can be spread over a period not exceeding four quarters from the quarter in which the fraud has been detected. However, if there is a delay in reporting it, the entire provisioning is required to be made at once.

The CBI FIR named chairman Sanjay Singhal; vice-chairman Aarti Singhal, along with directors of Bhushan Power, as suspects in the case. The FIR said Bhushan Power, through its directors and staff, availed of various credit facilities from 33 different banks and financial institutions between 2007 and 2014 and the outstanding default as on 30 January 2018 was ₹47,204 crore.

“The amount of ₹2,348 crore was dishonestly and fraudulently diverted by Bhushan Power through its directors and staff from five cash credit accounts to more than 200 companies,” it said.

The LiveMint reported

LM: PNB reports over ₹3800 crore fraud by Bhushan Power & Steel

6 July 2019: Punjab National Bank on Saturday said it has detected a fraud of ₹3,805.15 crore by Bhushan Power & Steel Ltd and has reported it to the Reserve Bank of India.

The exposure of ₹3,800 crore includes domestic exposure of ₹3,191 crore, overseas exposure of $49.71 million at the bank’s Dubai branch and $38.51 million at its Hong Kong branch.

PNB said the company misappropriated bank funds and manipulated books to raise funds from consortium lenders.

“On the basis of Forensic Audit Investigation findings and the CBI filing an FIR on a suo moto basis, against the company and its directors, alleging diversion of funds from the banking system, a fraud of ₹3,805.15 core is being reported by the bank to the RBI,” the bank said.

The state-owned bank also said that it has made provision of ₹1,932.47 crore against this account.

BPSL is one of the 12 accounts identified by the RBI for insolvency proceedings. JSW Steel has offered to pay ₹19,350 crore to financial creditors, which implies a haircut of around 60% for lenders.

The state-owned bank reported the fraud at a time when it is already recovering from the Nirav Modi scam, where it was defrauded of ₹11,400 crore.

The LiveMint 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

BS: NCLT approves okays Dhanuka Laboratories’ resolution plan for Orchid Pharma

25 June 2019: The Chennai bench of the National Company Law Tribunal (NCLT) has approved Dhanuka Laboratories’, resolution plan for the debt-ridden Orchid Pharma. The Tribunal has rejected a move against the plan filed by Accord Life Spec, another resolution applicant. Creditors will get about Rs 1,116 crore including Rs 570 crore quoted by Dhanuka Lab, along with cash. Orchid’s liquidation value was about Rs 1,300 crore.

The earlier resolution plan by Ingen, which was approved by the NCLT in the first attempt, was for a total of Rs 1,490 crore.

The selection of a prospective plan by the CoC ran into trouble with one of the CoC members – Punjab National Bank (International) – which sent an email seeking to change its e-voting to dissenting just ahead of the voting deadline. The initial 67.07 per cent votes favouring Dhanuka’s resolution plan (as against the regulatory requirement of 66 per cent) would have been went down to 65.53 per cent once the  change was considered.

The NCLT bench of BSV Prakash Kumar, member (judicial), and S Vijayaraghavan, member (technical), today observed that while Punjab National Bank (International) Ltd sent an email it did not place any grievance before NCLT. Simply sending an email against voting needn’t be taken into account, it added.

While the liquidation value was about Rs 1,300 crore, Dhanuka’s quote is worth Rs 570 crore, of which Rs 370 crore would be made upfront. The Resolution Professional informed the Bench that with other considerations, including Rs 321 crore of cash, the total amount creditors will get following the process will be about Rs 1,116 crore. The Bench observed that the valuation is almost equivalent to the liquidation value. 

Around 1,400 employees are earning their livelihood from the company and if there is no solution, they will be immediately impacted. Besides, if the company is revived and generates revenue, it will also be beneficial to the State, observed the Bench.

Another application filed by Chennai-based Accord Life Spec, a pharmaceutical company, against the RP considering Dhanuka’s plan, raised concerns that there has been procedural irregularity as the RP did not factor in the change in voting by Punjab National Bank (International). Its contention was dismissed by the Bench, which observed that Accord is not aggrieved by the exercise taken up by the CoC in approving the resolution plan placed before it. 

The RP argued that while Dhanuka has placed material related to the source of fund and its expertise in the business of Orchid Pharma, Accord could not show any source of fund for the proposed plan.

Accord Life Spec, which is part of the Rs 1,700 crore Accord Group, approached the NCLT against the RP’s decision to submit Dhanuka’s resolution plan, and said it is ready to revise its quote to Rs 615 crore if there is a favourable order from the NCLT.

This is the second attempt to find a successful resolution plan for the drug maker, as NCLT annulled Ingen Capital’s earlier plan after approving it for implementation, as the investor allegedly failed to remit upfront payment as per norms. Under Ingen’s resolution plan, which got NCLT’s nod on September 17, 2018, the company was expected to deposit Rs 1,000 crore upfront to the financial creditors. Ingen, however, sought more information, which was disallowed by the resolution professional. 

The Business Standard reported

BS: Ready to revise resolution plan for Orchid Pharma: Accord to NCLT

19 June 2019: With the National Company Law Tribunal (NCLT) yet to decide on Dhanuka Laboratories’ resolution plan for Orchid Pharma’s insolvency process, Chennai-based Accord Life Spec Pvt Ltd on Wednesday told the tribunal that it was ready to revise its proposal to Rs 615 crore. 

Accord Life Spec is a part of the Rs 1,700 crore Accord group, established by Dravida Munnetra Kazhagam (DMK) leader and former Union Minister of State, S Jagathrakshakan. The group has diversified interests in medical education, technical education, hospitals, breweries and hotels. The company is also a player in specialty segments like generics and formulations for oncology and other therapeutic applications. 

In an application filed with the Tribunal, Accord said that the decision of the Resolution Professional to propose Dhanuka Laboratories’ resolution plan, as approved by the Committee of Creditors (CoC), was procedurally illegal under the Insolvency and Bankruptcy Code (IBC).

Claiming that the resolution plan submitted by it was a viable one, Accord Life Spec said that it was “willing to revise and increase the value in the resolution plan after negotiations with the CoC, if an opportunity is given to the applicant herein.” 

It also submitted that “at present, it has proposed to pay a revised sum of Rs 615 crore to CoC, which proposal has not been placed to the CoC at any instance. The Applicant submits that there is a legitimate and fair chance of there being proper revival with higher value of recovery for creditors if the Applicant herein is given an opportunity to present its plan to the CoC…”

It sought NCLT’s direction to the RP to treat the Dhanuka’s resolution plan as rejected and consequently, to place Accord’s plan before the CoC for its consideration.

Orchid Pharma, in a recent regulatory filing, said that while the resolution plan from Dhanuka Laboratories had received 67.07 per cent votes in favour, one of the CoC members – Punjab National Bank (International) Ltd – had sent an email asking that their e-vote be changed to dissenting. Once the change is considered, the voting for the resolution plan would fall to 65.53 per cent, while it is required that 66 per cent of the CoC members vote in favour of a plan for it to be approved.

The Resolution Professional, according to legal advice, decided to file Dhanuka’s plan with the NCLT and sought guidance with respect to accepting the change in stand by Punjab National Bank (International) Ltd and on the treatment of voting percentage.

It is against this decision that Accord has now moved the NCLT. In its earlier petition, Accord had sought directions to the Resolution Professional and the CoC to take its email on May, 2019, into consideration. The NCLT bench comprising BSV Prakash Kumar, member (Judicial) and S Vijayaraghavan, member (Technical) dismissed the application stating that the company had no rights to file an application until its plan was approved.

The highest bid by Dhanuka Laboratories this time has seen a larger haircut compared to the Rs 1,490 crore bid submitted by the previous successful bidder, Ingen Capital. The quote is less than Rs 1,000 crore this time and is below the liquidation value, said sources close to the process. However, NCLT annulled Ingen Capital’s resolution plan after approving it for implementation, as the investor allegedly failed to remit the upfront payment according to norms. Ingen Capital’s resolution plan was approved by the NCLT on September 17, 2018, and according to the approved resolution plan, Ingen was expected to deposit Rs 1,000 crore upfront to the financial creditors. Ingen, however, sought more information, which was not allowed by the resolution professional. 

A consortium of 24 banks has lent a total of over Rs 3,200 crore to the drug maker. 

In the second attempt, three pharmaceutical companies – Gurgaon-based Dhanuka Laboratories, Chennai-based Accord Life Spec and Hyderabad-based Covalent Laboratories – were in the fray. Dhanuka Laboratories is a prominent manufacturer and exporter of oral cephalosporin APIs. Covalent also specialises in manufacturing cephalosporin and its intermediates.

The Business Standard reported

LM: India Ratings downgrades PNB’s ₹6,750-crore AT1 bonds

18 June 2019: India Ratings and Research (Ind-Ra) has downgraded Punjab National Bank’s additional tier I (AT1) perpetual bonds worth ₹6,750 crore by one notch to A/negative outlook from A /negative.

However, the rating agency has affirmed the bank’s overall long-term issuer rating at AA and the short-term issuer rating at A1.

The outlook reflects the negative return of asset (ROA) for two consecutive years, weak capitalisation with common equity tier (CET) I of 6.21 per cent in the fourth quarter of last fiscal, Ind-Ra said in a release.

“The fraud of ₹143.6 billion at PNB’s Brady House Branch and delays in resolution of certain assets under the National Company Law Tribunal (NCLT) process have led to elevated requirements of provisions, and a significant impact on the overall operations of the bank,” it said.

The rating of the AT1 bond signifies the weakness in the standalone operations of the bank, the release said.

PNB CEO Sunil Mehta had said that the lender would raise ₹5,000 crore through rights issue or the QIP route.

The bank is also expecting a write-back of ₹4,000 crore from Essar Steel, and Bhushan Power and Steel.

The LiveMint reported

LM: PNB puts on block 6 NPAs with outstanding of over ₹1,000 crore

17 June 2019: State-owned Punjab National Bank (PNB) has put on sale six non-performing loans amounting to over ₹1,000 crore, including two accounts of Vandana Vidyut and Visa Steel.

Asset reconstruction companies (ARCs), non-banking financial companies (NBFCs), other banks and financial institutions can submit binding bids till 26 June. The bids will be opened on the following day.

“We intend to place the (six accounts) for sale to ARCs/NBFCs/Other Banks/FIs etc,” said a notice put up by PNB.

The reserve price for the six non-performing assets (NPAs) has been fixed at ₹342 crore.

Bhopal-based Vandana Vidyut Steel owes ₹454.02 crore, while Kolkata located Visa Steel has an outstanding balance of ₹443.76 crore.

The rest four NPAs – Temptation Foods, Helios Photovoltaic, Cabcom Cables, and Zoom Vallabh Steel – are Delhi based.

The sale process is to be handled by the Stressed Assets Targeted Resolution Action (SASTRA) Division of the bank. The submission of financial bids will be only through e-auction method, which will take place on the portal of the bank, it said.

Punjab National Bank (PNB), which was hit by a massive ₹14,000-crore scam allegedly perpetrated by jeweller duo Nirav Modi and Mehul Choksi, has enhanced its recovery mechanism by forming the Stressed Asset Management Vertical (SAMV) and SASTRA.

It is also looking to raise ₹10,000 crore in 2019-20 from sale of non-core assets, rights issue and expected write-backs from two large accounts undergoing insolvency proceedings.

For the full fiscal 2018-19, the bank’s consolidated net loss was at ₹9,570.11 crore, as against a loss of ₹12,113.36 crore during 2017-18.

Its income during the fiscal ended March 2019 rose to ₹59,514.53 crore compared to ₹57,608.19 crore in preceding year.

Gross NPAs of the bank stood at ₹78,472.70 crore at the end of the financial year 2018-19, lower than ₹86,620.05 crore reported in 2017-18. Net NPAs were valued at ₹30,037.66 crore as against ₹48,684.29 crore.

The Delhi-headquartered bank had recovered ₹20,000 crore in 2018-19 as against ₹9,666 crore in the previous fiscal.

The LiveMint reported