11/4/2019 Resolution-less bankruptcies on rise in India | Deccan Herald https://www.deccanherald.com/business/economy-business/resolution-less-bankruptcies-on-rise-in-india-773084.html 1/15 Home / Business / Economy & Business / Resolution-less bankruptcies on rise in India Resolution-less bankruptcies on rise in India Furquan Moharkan, DHNS, Bengaluru, NOV 03 2019, 19:42PM IST UPDATED: NOV 03 2019, 21:10PM IST | Representative Image In 2016, the Insolvency and Bankruptcy Code (IBC) was enacted with much fanfare amid hopes of reviving the stressed companies. Three years on, the picture looks grimmer. There are two key takeaways from the data available with the Insolvency and Bankruptcy Board of India (IBBI): Firstly, in 2019, the insolvency proceedings have seen a surge, and secondly, in most cases
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Home / Business / Economy & Business / Resolution-less bankruptcies on rise in India
Resolution-less bankruptcies on rise in India
Furquan Moharkan, DHNS, Bengaluru, NOV 03 2019, 19:42PM IST UPDATED: NOV 03 2019, 21:10PM IST|
Representative Image
In 2016, the Insolvency and Bankruptcy Code (IBC) was enacted with much fanfare amid hopes ofreviving the stressed companies. Three years on, the picture looks grimmer.
There are two key takeaways from the data available with the Insolvency and Bankruptcy Board ofIndia (IBBI): Firstly, in 2019, the insolvency proceedings have seen a surge, and secondly, in most cases
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under the coveted IBC, the companies go under the hammer of liquidation.
In 2019 alone, 1,039 companies were taken by the creditors for the insolvency proceedings. In justnine months, this number is 8% higher than the 959 cases registered last year. According to marketwatchers, this indicates a few things -- economic indicators are weighing heavy on India Inc, and over-leveraging, largely seen as a legacy problem built-up over the years of financial mismanagement, isultimately taking a toll on India Inc.
At the end of the September quarter, the total outstanding amount of India Inc in the debt marketstood at a whopping Rs 30.8 lakh crore, while bank debt to industries and services sector stood atRs 51.4 lakh crore. The combined number is 4.44 times the net sales of India Inc at the end of the Junequarter, which according to CARE Ratings stood at Rs 18.5 lakh crore.
According to various analysts, an estimated Rs 42,000 crore worth of exposure spread across ninebanks, is facing a very high degree of stress -- with State Bank of India, YES Bank and Bank of Barodathe worst a�ected. In the wake of this, a fresh wave of bad loans is likely to hit the Indian banks --which is likely to cost about Rs 1.2 lakh crore, mostly from the companies in real estate and shadowbanking.
The economic slowdown isn't helping the situation either. Falling growth would mean lesser earningsfor Indian corporates. That increases the burden and the cost of servicing the debt in India manifolds.Quite naturally, many of these companies, where stress is visible (25 in total), are likely to defaultanytime in the near future. And many of them are big companies, which can cause a ripple e�ectleading to the collapse of other companies.
Lack of resolution plans
Another key observation in the IBC data is the lack of resolution plans. Of the 2,542 cases of thecorporate insolvency resolution process (CIRP) registered with the National Companies Law Tribunal(NCLT), 59% (or 1,497 cases are still pending). Of 1,045 cases that have seen resolution, an astounding56.2% of the cases (587 cases) have led to the liquidation in the companies. Only in 156 cases, theresolution plan is agreed upon, of which, in five cases, later on, liquidation was initiated.
Many experts believe that this is because of the lack of resolution plans. DH spoke to various peopleassociated with the law. "There are the usual issues with judgments and how things aren’t beingsettled in a time-bound manner," a person sitting on one of the bankruptcy committees told DH.
The source also added that there have been huge di�erences between operational creditors,financial creditors, and corporate debtors -- any of whom can initiate CIRP -- over the resolution plans.
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Till now, operational creditors have initiated 1,232 CIRPs, financial creditors have initiated 1,086 CIRPsand corporate debtors have initiated 224 CIRPs.
There have also been cases where either of the creditors hasn't been happy with the insolvencyproceedings. Like in case of Essar Steel's Rs 42,000 crore sale to ArcelorMittal. In this case, the bankswere forced to go for a larger haircut than originally planned, as the NCLAT said secured creditors willget only 60.7% of their Rs 49,473-crore claims while the rest will go to operational creditors, who willbe treated on par with financial creditors.
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Home / Business / Economy & Business / Amazon faces CCI snag to get Future group retail stake
Amazon faces CCI snag to get Future group retail stake
Reuters, NOV 03 2019, 19:46PM IST UPDATED: NOV 03 2019, 20:49PM IST|
India’s antitrust body has sought more information from Amazon.com Inc about its plannedacquisition of a stake in India’s Future Retail, which could potentially delay the deal, sources withknowledge of the matter said.
Amazon in August agreed to acquire a 49% stake in a unit of India’s Future Group which owns 7.3% ofFuture Retail, giving the US-based company a 3.58% stake in the retailer which operates more than
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1,500 stores in the country. The deal would help Amazon tap into the booming retail market in India,as it separately boosts its e-commerce operations, o�ering everything from electronics to groceries onits Indian website. Future Retail runs 290 budget department and grocery stores branded “Big Bazaar”.
In a notice to Amazon last month, the Competition Commission of India (CCI) said “in certainoverlapping segments and areas of operation of the parties, the combined market share exceeds thethreshold specified in the combination regulations”, one of the sources said.
The CCI also queried the procedure Amazon adopted to seek approval. Amazon had notified the CCIthrough a so-called Form I, instead of a Form II that is more onerous and is required when partiesassess the combined entity will exceed a pre-defined market share threshold.
The CCI sought justification from Amazon on why it chose to file a Form I, the source added, whichcould potentially delay approval of the deal. A Form I filing typically takes 2-3 months compared withthree to six months for a Form II.
A source at Future group said it had recently answered the CCI’s questions related to the deal, but didnot elaborate.
Additionally, the competition watchdog has asked Amazon more than 40 questions related to the dealand its businesses, the first source with knowledge of the matter said.
A second source confirmed that the CCI had sent additional queries to Amazon, calling it part of theregular deal approval process by the watchdog.
“There are questions about e-commerce ... the CCI needs to assess whether there is any adverseimpact on competition or not,” the source said.
Amazon’s notification available on the CCI’s website says the company believes the deal is “not likelyto cause an appreciable adverse e�ect on competition” in India.
“Such queries mean the deal is being closely scrutinised and could face potential delays, but it caneventually sail through if no antitrust concerns are found,” said Karan Singh Chandhiok, an antitrustpartner at Indian law firm Chandhiok & Mahajan who is not involved in the proposed stake purchase.
Typically in such cases, the company needs to defend its decision and, if the watchdog disagrees, hasno choice but to give more details in a Form II filing, Chandhiok added.
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PTI, New Delhi, NOV 01 2019, 18:35PM IST UPDATED: NOV 01 2019, 18:35PM IST|
Tata Motors on Friday reported a 33.58 per cent decline in total sales at 41,354 units in October.
The company had sold a total of 62,264 units in the same month last year, Tata Motors said in astatement.
Total domestic sales were down 32 per cent at 39,152 units as compared with 57,710 units in Octoberlast year, it added.
Passenger vehicle sales in the domestic market during the month stood at 13,169 units as against18,290 units in October last year, 28 per cent down.
"In October retail sales were the highest in this fiscal recording a 70 per cent increase month-on-month. In this fiscal, network stock has been reduced by 38 per cent. October-end network stock is thelowest in last two years. This will help our network to be prepared for a smooth BS6 transition," TataMotors President, Passenger Vehicles Business Unit Mayank Pareek said.
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Similarly, the company reported 34 per cent decline in total commercial vehicle sales at 25,983 unitsas against 39,420 units in the year-ago period.
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Sensex ends marginally higher; Yes Bank drops 5 pc
PTI, Mumbai, NOV 01 2019, 15:59PM IST UPDATED: NOV 01 2019, 15:59PM IST|
Equity benchmark BSE Sensex ended marginally higher at 40,165 points on Friday a�er a volatilesession as markets consolidated a�er scaling new highs.
Advancing for the sixth consecutive session, the 30-share index settled 35.98 points or 0.09 per cent,higher at 40,165.03. The index swung 269 points during the day, hitting a high of 40,283.30 and a lowof 40,014.23.
The broader NSE Ni�y too advanced 13.15 points, or 0.11 per cent, to close at 11,890.60.
Top gainers in the Sensex pack included IndusInd Bank, Tata Steel, Vedanta, Tech Mahindra, ONGC,Axis Bank and ITC, rising up to 5.18 per cent.
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On the other hand, Yes Bank was the biggest laggard, tumbling 5.46 per cent, ahead of its quarterlyresults.
TCS, M&M, Asian Paints, Tata Motors, L&T, HCL Tech and NTPC too lost up to 3 per cent.
Recent peaks were short-lived and profit booking emerged especially in companies that ralliedsubstantially in the past few weeks, analysts said.
Investor sentiment was also subdued a�er the release of core sector output data post market hourson Thursday.
The output of eight core infrastructure industries contracted by 5.2 per cent in September, the lowestin a decade, indicating the severity of economic slowdown.
The eight-core sectors had expanded by 4.3 per cent in September 2018, according to o�icial data.
Globally, bourses in Shanghai, Hong Kong, and Seoul settled higher on optimism over the US-Chinatrade deal, while Tokyo ended in the red.
Exchanges in Europe were trading on a positive note in their respective early deals.
Meanwhile, the Indian rupee appreciated marginally to 70.89 against the US dollar intra-day.
Brent crude futures, the global oil benchmark, rose 0.40 per cent to USD 59.86 per barrel.
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Home / Business / Economy & Business / Sebi levies Rs 22L fine on P.M. Telelinnks' promoters
Sebi levies Rs 22L fine on P.M. Telelinnks' promoters
PTI, New Delhi, NOV 01 2019, 15:45PM IST UPDATED: NOV 01 2019, 15:45PM IST|
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Markets regulator Sebi slapped a total penalty of Rs 22 lakh on promoters of P.M. Telelinnks and sixother individuals for executing fraudulent trading in the scrip of the firm.
Out of the total fine levied by Sebi, Rs 10 lakh was on promoters -- G P Surana, Ravi Surana, and DipinSurana -- to be paid jointly and severally by them. Others are facing a fine of Rs 2 lakh each.
The order was followed by an investigation carried out by Sebi between January 2012 and September2012, on observing unusual price movement in the scrip of P.M. Telelinnks on BSE.
Sebi noted that the individuals had caused an artificial price rise in the scrip of the company byestablishing a new high price and by executing trades at a price higher than the last traded price.
Besides, the promoters were paying funds and shares of the company to certain suspected entities forthe purpose of inflating the price of the scrip.
"The noticees dealt in the scrip of PM Tele in a coordinated manner to artificially inflate the price ofthe scrip, thereby inducing gullible investors to trade in the scrip of PM Tele," Sebi said.
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Regarding the promoters, the regulator noted that they had a "key role in the entire manipulation asthey facilitated fraudulent activities by providing other noticees with funds and securities".
It further said that being the promoters, they had a "greater responsibility to prevent any misusepertaining to the shares of PM Tele".
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