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Some want IBC not to be implemented: ArcelorMittal

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Sunil Mittal-wefornews

New Delhi, Jan 22 After years of trying to get a foothold in India through a greenfield project and almost getting it via a brownfield acquisition, the world’s largest steelmaker ArcelorMittal on Tuesday castigated corporate rivals for trying to sabotage its takeover bid of Essar Steel under the new bankruptcy rule.

“It appears there are certain parties in India who would like that the Insolvency and Bankruptcy Code (IBC) not be implemented according to the law.

“The IBC was introduced for a very serious reason – to address a major problem with bad loans. If the law is not implemented correctly and the rules are flouted, as suggested by some, this sends a negative signal about the certainty of India as an investment destination,” ArcelorMittal India tweeted.

The outburst of the company headed by NRI Lakshmi Niwas Mittal, is significant as it follows the decision by India’s largest lender State Bank of India (SBI) to put on sale its entire loan exposure of Rs 15,431 crore in bankrupt Essar Steel, which is undergoing resolution proceedings since August 2017, much beyond the mandatory 270 days allowed under the IBC.

In October 2018, the Committee of Creditors (CoC) to Essar Steel, led by SBI, had approved ArcelorMittal’s proposal of Rs 42,000 crore to the lenders and an additional Rs 8,000 crore towards capital expenditure in Essar Steel.

However, a group of creditors including the promoters of Essar Steel have challenged the decision of the CoC. Last week, the CoC filed an application at NCLAT requesting for a speedier disposal of the case within the next three weeks.

The company, in its tweeted statement, said that the opportunity to make an offer for the assets in the IBC process has been very transparent and no company or individual can say they were not aware of the process and therefore should not expect to come in at a late stage, providing no details as to the financing of their offer after a decision has been taken by the CoC.

Soon after the CoC of the debt laden firm had declared ArcelorMittal as the highest bidder in the auction for the steel company, promoters of Essar Steel came up with its offer to repay Rs 54,389 crore seeking withdrawal from insolvency proceedings.

The plan included an upfront cash payment of Rs 47,507 crore to all creditors, including Rs 45,559 crore to the senior secured financial creditors, i.e. 100 per cent recovery.

“In the case of Essar Steel, opportunities have been provided to bidders for nearly a year to first be eligible and second, to make a compelling offer.

“ArcelorMittal has followed the process from the start. We fully expect the process to continue to be implemented correctly and as per the law and that statements attempting to convince otherwise not be given any credibility,” it concluded.

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Markets open on positive note

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Sensex Nifty Equity

Mumbai, Feb 20: The 30-scrip Sensitive Index (Sensex) on Wednesday opened on a positive note during the morning session of the trade.

The BSE Sensex opened at 35,564.93 before touching a high of 35,581.14 and a low of 35,520.21.

It was trading at 35,528.69 up by 176.08 points or 0.50 per cent from its Tuesday’s close at 35,352.61.

On the other hand, the broader 50-scrip Nifty at the National Stock Exchange (NSE) opened at 10,655.45 after closing at 10,604.35.

The Nifty is trading at 10,656.25 in the morning.

IANS

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PF funds’ investment in IL&FS bonds have no government guarantee: Finance Ministry

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IL&FS Financial Service

New Delhi, Feb 19 (IANS) The provident and pension fund trusts that invested in the IL&FS bonds now fear loss of money as the debt-ridden company’s bonds are unsecured debt, and the Finance Ministry says superannuated bonds do not carry any government guarantee and all such instruments have to face all market-related risks.

“Since these are investments in bonds, the government does not ensure any guarantee on them as such and if these are invested in stock markets, they carry the market risks as applicable. It is between the bond issuer and bond holders…,” the Finance Ministry said in response to IANS queries.

Thousands of crores of money of more than 15 lakh employees of both public and private sector companies have exposure to IL&FS bonds.

However, queries sent to the EPFO Commissioner and Labour Minister Santosh Gangwar remained unanswered.

Over 50 funds that manage retirement benefits of over 15 lakh employees have exposure to IL&FS. PF trusts of state electricity boards, public sector undertakings (PSUs) and banks are among them. The provident and pension fund trusts have filed intervening applications in the National Company Law Appellate Tribunal (NCLAT) stating that they stand to lose all the money since the bonds are under unsecured debt.

Usually, retirement funds have a low-risk appetite and invest in “AAA” rated bonds (which IL&FS bonds used to be once upon a time) and get assured returns with low interest rates.

The worries of pension and provident fund trusts come from the classification of IL&FS profiling its companies as to which can meet the dues obligations. Many important trust managing funds of PSUs like MMTC, IOC, Hudco, SBI and IDBI are among those filing petitions. From private sector, HUL and Asian Paints are among the petitioners.

IL&FS is currently under resolution process at the National Company Law Tribunal (NCLT). The process will decide under Section 53 of the IBC the order of priority for distribution of proceeds of the process.

The beleaguered company has informed the NCLT that of the 302 entities in the group, 169 are Indian companies, out of which only 22 are emerging as those which can meet all obligations (green), while 10 firms can pay to only secured creditors (Amber). There are 38 companies of IL&FS (red) which cannot meet any obligations of payment, and 120 entities are still being assessed.

These PF and provident funds trusts are worried that if payment is limited to secured creditors, then only financial creditors like banks will receive the dues while unsecured bond-holders will be get any payments.

IL&FS bonds attracted investments by PF trusts as it had the shareholding of SBI and LIC giving its bonds the comfort factor.

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Sachin Bansal invests Rs 650 crore in Ola

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Bengaluru, Feb 19 (IANS) Internet entrepreneur and Flipkart co-founder Sachin Bansal has invested Rs 650 crore, or about $92 million, in ride-hailing platform Ola in his personal capacity as investor, the company said in a statement on Tuesday.

This investment is part of Ola’s larger Series J funding round. It is also the largest investment by an individual in Ola to date, it said.

“Ola is one of India’s most promising consumer businesses that is creating deep impact and lasting value for the ecosystem. On one hand, they have emerged as a global force in the mobility space and on the other, they continue to build deeper for various needs of a billion Indians through their platform, becoming a trusted household name today,” Bansal said.

He further said he has known Ola founder Bhavish Aggarwal as entrepreneur and friend over the years and that he has great respect for what he and the team at Ola have built in 8 years.

“We are extremely thrilled to have Sachin onboard Ola as an investor. Sachin is an icon of entrepreneurship and his experience of building one of India’s most respected businesses ground up, is unparalleled,” Ola CEO Bhavish Aggarwal said.

Ola integrates city transportation for customers and drivers onto a mobile technology platform ensuring convenient, transparent, safe and quick service fulfilment, the statement added.

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