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National Highways Authority of India (NHAI) would be borrowing over Rs 2 lakh crore from the market for a five-year period. The funds would be raised to partly finance a slew of infrastructure projects, including the ambitious Bharatmala.

The centre plans to invest a whopping Rs 6,92,324 crore during financial years 2018-2023, of which Rs 3,85,000 crore is for the Bharatmala Pariyojana and about Rs 3 lakh crore for other projects including the conventional highways that it normally finances, NHAI has disclosed in a prospectus just filed.

The Rs 3.85 lakh crore that it would be investing in the Bharatmala project would come in a small way from retail Bharatmala Bonds worth Rs 10,000 crore to be raised over several tranches, for which a shelf prospectus has been filed.

“NHAI has availed certain borrowings from Life Insurance Fund and Employees Provident Fund, rupee-denominated masala bonds and is proposing to issue Bharatmala bonds and private placement of long-term bonds, etc. For the total requirement of Rs 6,92,324 crore, NHAI intends to borrow Rs 3,77,045 crore from Government of India, Rs 2,09,279 crore by way of market borrowings and Rs 1,06,000 crore from public-private partnership,” the prospectus on Bharatmala Bond issue said.

The government has asked NHAI to develop 34,800 kilometres of highways under Bharatmala Pariyojana.

The Bharatmala bonds are taxable, redeemable, non-convertible debentures of face value Rs 1,000 each. According to disclosures made by NHAI, rupee depreciation might hurt the organisation as it has unhedged outstanding multilateral external borrowings of Rs 5,634 crore from Asia Development Bank as on September end to be repaid fully by July 2025.

“This loan is not hedged for repayment of principal and interest and repayment of principal and interest is to be made in the foreign currency. Any increase in the interest rates and any adverse fluctuation in the exchange rates may increase the cost of borrowings, thereby increasing the overall costs of the relevant projects,” NHAI has disclosed.

It has contingent liabilities in the form of 1,014 arbitration cases and 730 court cases involving Rs 55,345 crore. On the other hand, NHAI has claimed Rs 29,584 crore in arbitration.

This article was published in DNA as <a href="https://www.dnaindia.com/business/report-nhai-to-borrow-rs-2-lakh-cr-to-fund-bharatmala-other-projects-2687659">'NHAI to borrow Rs 2 lakh cr to fund Bharatmala, other projects'</a>

National Highways Authority of India (NHAI) would be borrowing over Rs 2 lakh crore from the market for a five-year period. The funds would be raised to partly finance a slew of infrastructure projects, including the ambitious Bharatmala.


NHAI to raise Rs.2 lakh cr from debt market

After a failed attempt with Au Bon Pain cafe chain, Sanjiv Goenka is re-entering the quick service restaurant (QSR) space. The group, through its new entity Bowlopedia Restaurants, is launching two QSR brands; Bombay Toastee in the street style comfort food chain space and Waffle Wallah, positioned as one of the first chains for waffles.

Pilot outlets have just been opened in Delhi and Kolkata and there are plans to set up more in next 12 months.

Bombay Toastee would be serving value-for-money comfort food in street style yet hygienic environment through 60 different combinations, the group told investors.

Waffle Wallah, on the other hand, would be banking on “sudden explosion witnessed in waffle space” targeting people in the “15-35 age group, working professional, hygienic street side gourmet food seeker and food Enthusiast,” an official said.

To be made available in parlour, kiosks and e-cart formats, Waffle Wallah now has about 20 outlets in NCR and Kolkata with plans to add ten more by year-end.

Bombay Toastee plans to bring street foods under organised QSR and would serve toasts, Sandwiches, noodles, rolls, burger and fries, has a pilot presence in Delhi with plans to set up 10 by year-end.

“Unhygienic food is not welcome anymore, people prefer the same food items served in a hygienic environment at a great value. Bombay Toastee is hitting this trend at the right time by corporatising street food,” the official said.

The strategy seems to target the value-for-money segment in QSR rather than the premium space.

This article was published in DNA as <a href="https://www.dnaindia.com/business/report-sanjiv-goenka-re-enters-qsr-space-with-bombay-toastee-2687347">'Sanjiv Goenka re-enters QSR space with Bombay Toastee'</a>

After a failed attempt with Au Bon Pain cafe chain, Sanjiv Goenka is re-entering the quick service restaurant (QSR) space. The group, through its new entity Bowlopedia Restaurants, is launching two QSR brands.


Sanjiv Goenka re-enters QSR space with Bombay Toastee

UltraTech is set to bag Binani Cement, with the National Company Law Appellate Tribunal (NCLAT) on Wednesday approving the revised bid of Aditya Birla group firm UltraTech Cement while rejecting the earlier preferred offer of Dalmia Bharat group as discriminatory.

A two-member bench of NCLAT, headed by chairman justice S J Mukhopadhaya ordered “constitution of monitoring committee and implementation of revised approved plan submitted by ‘Ultratech Cement Limited’ in accordance with law”.

The 44-page judgement made wide ranging observations on the various aspects of Insolvency and Bankruptcy Code, reminding the key objectives and principles of the rules and its abuses, which would impact the outcome of the resolution of several other entities including Essar Steel where the contours of the disputes are similar.

Dalmia Bharat-promoted Rajputana Properties had moved the Supreme Court against a decision by the lenders of Binani to consider the revised resolution plan submitted by UltraTech. The committee of creditors had also asked Rajputana Properties to revise its offer of Rs 6,930 crore.

This story first appeared in DNA Money:&nbsp;<a href="https://www.dnaindia.com/business/report-ultratech-bags-binani-cement-at-nclat-2685795">Binani Cement goes to UltraTech at NCLAT</a>

UltraTech is set to bag Binani Cement, with the National Company Law Appellate Tribunal (NCLAT) on Wednesday approving the revised bid of Aditya Birla group firm UltraTech Cement while rejecting the earlier preferred offer of Dalmia Bharat group as discriminatory.


Aditya Birla group firm UltraTech Cement bid cleared, set to bag Binani Cement, Dalmia Bharat gets snubbed  

Kolkata: Cost of sourcing coal for industry has skyrocketed with the premium being paid by sectors such as cement, steel or aluminium crossing 100% over prices paid by the power sector. Diversion of coal meant for these private sectors to power plants continues forcing industry to buy costly coal from auctions where prices were more than double or about 102% of the notified prices paid by the power sector in September, according to data submitted by Coal India to the ministry.

The situation was much better in the previous year when the premium was 67%. Every year, Coal India supplies about 90% of its coal at notified prices to mostly power plants and specified other sectors while the balance 10% is sold via e-auctions which largely reflects current demand-supply scenario, or how badly the private sector need coal supplies.

During September 2.58 million tonne (mt) of coal was put for spot-e-auction at prices which, on average, was sold at 102% over notified prices. This compares with 3.05 mt in September of 2017, which was sold through spot e-auction at 67% premium over Coal India’s fixed notified prices.

The jump in the premium could be seen going up mainly due to lower quantity of coal put to auction, which dropped over the years from 4.07 mt in September 2016 to 3.05 mt in 2017 to 2.58 mt in 2018. Even during the current year, the quantity offer for spot-auction every month is progressively lower over 2017 levels, the data revealed.

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And in the April-September period, 17.69 mt of coal was offered through spot e-auction against 22.14 mt in the corresponding period of 2017. This resulted in premium in 2018 staying at 88% over notified prices against just 49% in 2017.

This has happened despite Coal India achieving a double-digit production growth of 10.6% during the first six months of the current fiscal.

“Notwithstanding this healthy growth, the domestic coal supply remains significantly short of the domestic demand on the back of a strong recovery in power demand, lower hydropower generation in the current fiscal, as well as a healthy growth in production levels from non-regulated consuming sectors like cement, aluminium, and steel,” rating agency Icra has said in a report on the coal sector.

This article was first publish in DNA Money. Here is the article link:<a href="https://www.dnaindia.com/business/report-industry-pays-100-more-than-power-plants-for-coal-2684716">&nbsp;Industry pays 100% more than power plants for coal</a>

Cost of sourcing coal for industry has skyrocketed with the premium being paid by sectors such as cement, steel or aluminium crossing 100% over prices paid by the power sector.&nbsp;


India Inc pays 102% more than power plants, double the notified coal rate

Tata Steel’s upcoming special economic zone (SEZ) at Gopalpur in Odisha has started investing in creating infrastructure under the first phase of the project, just days ahead of approval expiry deadline in the middle of November.

With the receipt of environmental clearances, Tata Steel has started putting in the first phase of investment of about Rs 390 crore on the required infrastructure, an official of Tata Steel told DNA Money.

“This would be for developing infrastructure in about 1,050 acre in the first phase. Some amount of developmental work has already started on the ground which began after getting the environmental clearances. Work could not be started so far because of this reason,” the official, who has been associated with the project since the beginning, said on the sidelines of the Global Mining Summit organised by CII.

Gopalpur Industrial Park, located next to the Gopalpur port and around 200 kilometre from Adani’s Dhamra port, is being developed by Tata Steel SEZ over 3000 acre, of which 1200 acre is notified SEZ and the balance would be domestic tariff area.

The project has received investment commitments from pharmaceutical, chemical and apparel companies which would set up their units there.

“The project has received firm commitment from several such investors but since the final agreement hasn’t been signed yet, we would be able to announce details of the customers next month,” he said.

While according to reports a Kerala-based apparel manufacturer has committed to invest Rs 177 crore to set up a unit for knitting, processing and garment manufacturing facility at the SEZ, the official didn’t confirm, citing ongoing negotiations.

Tata Steel in November last year was granted a one-year extension for starting execution of the multi-product special economic zone project saying that it was waiting for environment clearance. The approval would have been taken away if the SEZ Board of Approval was not happy with the progress of the work next time the body under the commerce ministry took up the matter in its meeting.

The nod by the Board of approval, highest decision-making body on SEZ related issues, would have expired this month.

The anchor investor for the project would be Tata Steel itself which has already set up a 55,000-tonne-a-year high carbon ferro-chrome plant. Tata Steel has also brought in Ashish Mathur as the new head of the project.

Mathur has been heading Jamshedpur Utilities and Services Co or Jusco, an arm of Tata Steel which is now an independent urban infrastructure provider.

Source: DNA&nbsp; Money

Tata Steel’s upcoming special economic zone (SEZ) at Gopalpur in Odisha has started investing in creating infrastructure under the first phase of the project, just days ahead of approval expiry deadline in the middle of November.


Tatas start investing in Odisha SEZ

The feuding promoters of Usha Martin have decided to bury their differences temporarily to allow the sale of the company’s steel plant to Tata Steel group company Tata Sponge Iron Ltd (TSIL).

The faction led by Prashant Jhawar, the co-promoter and ousted chairman of Usha Martin with more than 25% shareholding, has decided to approve the deal at the upcoming meeting of the shareholders. Jhawar, however, is still critical of the current management headed by Rajeev Jhawar and may pursue the case he is currently fighting in the court.

“In order to facilitate the deal, we have instructed our lawyers to support the resolution for the sale of the steel division of Usha Martin to TSIL at the forthcoming shareholders meeting. We have also conveyed our decision to the lead banker, State Bank of India,” Jhawar said on Monday.

Both Prashant and his father Basant Kumar Jhawar, now acting in concert, own 25.5% stake in the company and their votes are crucial at the upcoming Extra Ordinary General meeting of the company to be held on November 10 in Kolkata.

“We are confident that TSIL will run the assets in the way they deserve to be administered and enhance the legacy,” a statement from the London-based Prashant Jhawar said.

The faction controlled by managing director Rajeev Jhawar, Basant’s nephew, however, is yet to settle the legal dispute started by Prashant following his ouster. And going by Prashant’s statement and proceedings at the Calcutta High Court, the dispute is likely to linger on and may even turn nastier.

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“We are doing this (voting in favour of deal with Tata Steel) even though our concerns over specific utilisation of sales proceeds towards repayment of term loan, working capital, unsecured and operating creditors and, more particularly, the contingent liabilities in the residual business,” Prashant’s statement said, adding that his concern about the settlement of contingent liabilities of Rs 860 crore, including claims from Jharkhand government, pertaining to irregularities in the mining as well as possible diversion of funds remain unaddressed.

&nbsp;

Source: DNA Money

The faction led by Prashant Jhawar, the co-promoter and ousted chairman of Usha Martin with more than 25% shareholding, has decided to approve the deal at the upcoming meeting of the shareholders. Jhawar, however, is still critical of the current management headed by Rajeev Jhawar and may pursue the case he is currently fighting in the court.


Usha Martin unit goes to Tata Steel as feuding promoters bury their hatchet temporarily

Shapoorji Pallonji group has merged the manufacturing arm of Eureka Forbes, a market leader in water purifier and vacuum cleaning business, with the latter to improve the weak financial health of the business. With brands like Aquaguard and Euroclean, Eureka Forbes is a marketing and sales company, which has manufacturing operations housed in its subsidiary Aquamall Water Solutions.

To improve the financial health of both these businesses marked by poor profitability and leveraged capital structure, the Pallonji family has merged the two companies, filing with the Registrar of Companies disclosed.

Despite controlling an estimated market share of 65% and 75% in water purifying and household vacuum cleaner businesses, respectively, Eureka Fobes has been suffering losses and its weakening financial parameters have forced rating firm Icra to downgrade the parent firm Forbes and Co’s long-term rating to A+ with a negative outlook from AA- last week.

Eureka Forbes, an unlisted entity is a wholly owned subsidiary of Forbes and Co, one of the oldest companies of the world, having set up in 1767, now held by Shapoorji Pallonji group.

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“Given that the transferor company has manufacturing units and supplies very substantial portion to the transferee company which markets the same, it would be advantageous to combine the activities and operation of both companies into a single company for synergistic linkages and benefits of combined financial resources. This would be reflected in the profitability of the transferee company,” the rationale behind the scheme of merger between Eureka Forbes and AquaMall filed with the ROC earlier this year said.

Source: DNA Money

Shapoorji Pallonji group has merged the manufacturing arm of Eureka Forbes, a market leader in water purifier and vacuum cleaning business, with the latter to improve the weak financial health of the business.


Shapoorji Pallonji group merges manufacturing arm of Eureka Forbes 

Kumar Mangalam Birla’s move to demerge the cement arm of Century Textile faced a stiff opposition at the shareholders’ meeting with over 23% of voting public shareholders opposing the scheme.

The votes of public shareholders against the demerger scheme on Wednesday also include those of M P Birla Group owned by the Lodhas of Kolkata, sources said.

Lodha family-controlled investment company Punjab Produce and Trading Co had earlier gone to court with a plea for an injunction on the demerger, claiming that the move would hurt its interest as Century Textile would be left poorer as its main revenue earning business division would be taken away.

It now appears that not only the Lodhas, but a large segment of minority public shareholders were also not happy with the cement division being taken away and merged with UltraTech, the cement behemoth of the K M Birla Group.

Data revealed by Century Textile on the voting pattern shows that 25.18% of public shareholders who voted opposed the scheme through the e-voting option while 23.21% of total votes pulled from public shareholders, including voting done through the electronic mode as well as physical votes at the meeting of the shareholders, were against the resolution.

In terms of the Sebi circular and order of National Company Law Tribunal (NCLT), the scheme was required to be approved by the majority of the public shareholders of the company, and accordingly voting by public shareholders were carried out through postal ballot and remote e-voting. 
A significant portion of financial institutions who voted on the resolution, 16.71% expressed displeasure on the proposal, the voting pattern data showed.

nstitutions hold 26.09%, including mutual funds, which own 14.37% stake in Century Textile including Life Insurance Corporation (LIC), funds of Goldman Sachs, Kotak, HDFC and L&amp;T Mutual Fund.

But with the promoters holding 50.21% total shares, the proposal got a smooth ride and would now get approval from NCLT.

The Lodhas own 1.62% in Century Textile through their flagship group outfit Birla Corp.

Their investment arm Punjab Produce and Trading Co owns 17.52% of Pilani Investment, the Kumar Mangalam Birla-owned holding and investment entity.

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Pilani, in turn, holds a 33.11% stake in Century Textile creating significant indirect interest of the Lodhas in Century which will now lose half of its revenues post the demerger.

Source: DNA Money

Lodha family-controlled investment company Punjab Produce and Trading Co had earlier gone to court with a plea for an injunction on the demerger, claiming that the move would hurt its interest as Century Textile would be left poorer as its main revenue earning business division would be taken away.


Kumar Mangalam Birla faces shareholders heat over Century Textile unit demerger    

SAIC Motor Corp, the largest Chinese automaker, is betting big on electric vehicles in India. MG Motor India, a wholly-owned arm of SAIC, will roll out a locally manufactured pure-electric SUV by first half of 2020, within one year of its first product launch in the country,

The Chinese conglomerate took over the Halol plant of General Motors in 2017 following the exit of the American carmaker and had announced plans to launch its maiden product for the Indian market, an SUV, in the second quarter of 2019. The electric SUV would the second vehicle to be introduced within a year of that launch, and would be a mass-produced, SAIC’s global management said on Monday.

“We will launch a globally-competitive pure-electric SUV in India. The pure electric SUV will be a breakthrough chapter in the EV space in India, being one-of-its-kind in the market. This is in addition to the first SUV, which we plan to launch in the second quarter of next year,” Michael Yang, executive director of, international business of SAIC Motor said.

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Unsure of government incentive, market acceptance, price sensitivity and critical need of infrastructure like charging stations, most major automobile makers have been non-committal on manufacturing with the government still reworking on the upgrade of 2015 policy on ‘Faster Adoption and Manufacturing of Hybrid and Electric vehicles.

The government is now thinking of restricting its incentive to batteries only, a high-cost component, rather than on the whole vehicle.

“Considering probable demand, nobody would put up a battery manufacturing plant, but SAIC, with its collaboration with one of the few global manufacturers, CATL of China, is developing batteries in an economical way,” Rajeev Chaba, president and managing director, MG Motor said unveiling MG Motor’s India plant at its Shanghai facility.

SAIC has been at the forefront of the development of electric, connected and autonomous cars and some of the products are also set to be manufactured in India.

“We plan to launch one new vehicle every successive year in a five-year period following our first product launch next year, and fully utilise the 80,000 vehicle Halol plant in a year’s time. In the next phase, we might launch CVs and buses,” Chaba said.

MG Motor is already in the process of finalising around 45 dealers to begin its sales next year, with around 100 touch points across India in the first phase.

“We would be restricting the number of dealers, allowing each one to grow with us instead of restricting their size and expanding the number of dealerships, thus leading to unhealthy competition among them, which ultimately leads to hurting the brand image due to discounting,” Chaba said.

MG Motor’s management is hopeful of cracking the domestic market, so as to not remain a marginal player under the shadow of behemoth Maruti Suzuki.

“The past failure of some of the global players have taught us the lesson about what not to do in India. Our commitment shows that we are here for the long haul as a significant player,” he said.

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The vehicles would have a significant localisation level with Halol having a major vendor base, many of whom would be existing arms of SAIC.

Source: DNA Money

SAIC Motor Corp, the largest Chinese automaker, is betting big on electric vehicles in India. MG Motor India, a wholly-owned arm of SAIC, will roll out a locally manufactured pure-electric SUV by&nbsp; first &nbsp;half of 2020, within one year of its first product launch in the country,


A pure electric SUV in India? Check out 'breakthrough chapter in EV space'

Infra sector is crumbling as project delays, cost overruns and financing woes mount. Even new models like hybrid-annuity are proving to be unviable. Private sector investment is the key to revival, but the return of private capital may be delayed because of the inherent weakness in financial markets.&nbsp;

-Under HAM, 40% of the project cost is borne by the govt and the rest can be raised by the contractor via debt or equity&nbsp;

-NHAI accounts for 70% of all road investments, which, in turn, rely mainly on cess collected by the government

Ranajit Bhattacharya, an otherwise healthy senior official of construction company IVRCL, fell sick on March 31, 2016, after getting a phone call.

In Kolkata, an under-construction flyover passing through one of the busiest roads in the heart of the city had collapsed that day, crushing 27 people on the spot and gravely injuring 80. Seven days later, Bhattacharya was arrested.

Exactly seven years before that fateful day, Bengal Urban Infrastructure Development Pvt Ltd, a joint venture between the state government and IL&amp;FS, selected IVRCL and a Chinese partner for constructing Vivekananda Flyover in 18 months’ time at a cost of Rs 164.64 crore. Gammon, Simplex and Tantia Construction were other bidders in the fray.

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IVRCL is now bankrupt; Gammon, Simplex and Tantia have all been dragged to the National Company Law Tribunal; and IL&amp;FS has just been taken over by the government to prevent a major economic crisis.

A portion of that flyover still casts a shadow on the people below. A subsequent report of Comptroller and Auditor General (CAG) found that a third-party quality control agency had won the bid by quoting an abnormally low rate of Rs 6.97 lakh. A night before the collapse, an instruction by the contractor to stop work because of weakness in the structure wasn’t followed, the report pointed out.

The infrastructure crisis has truly turned into a nightmare for the country - Project delays, costs overruns, stretched liquidity and cashflow mismatch triggered by unrealised payments, lack of access to long-term capital leading to over-dependence on short-term debt that leads to firms defaulting on their obligations.

This pretty much sums up most of the infrastructure construction companies, many of which have now landed up in the National Company Law Tribunal, waiting to be rescued by a knight with a bag full of money, or, more realistically, suffer liquidation and be sold off in parts at throwaway prices.

The cookie crumbles 
During 2008-2012, infrastructure spending was at about 7% of the gross domestic product (GDP). By 2012, the game-changing public-private partnership (PPP) model acquired significant scale, with World Bank’s Private Participation in Infrastructure (PPI) database ranking India on top among developing nations between this period.

But from there, it hit a speed bump and infrastructure spending fell to about 5.8% of the GDP in 2013-2017.&nbsp;“Since then, a raft of risks manifested, exposing lacunae in the PPP architecture, leading to a spike in stalled projects and stressed debt, which muted risk appetite in the private sector,” said Crisil Infrastructure report 2018 issued last week.

Profligate attitude 
What ails a typical infrastructure construction sector company and when exactly the trouble started?&nbsp;While the strains were showing much earlier, the tipping point was reached for many such companies in 2016.

“Till about 2012-13, everybody was in construction mode. Nobody was bothered about the payback. There was easy money from the banks that lent at reckless terms. Private sector companies were more concerned with boosting up their order books and never really looked at the viability. The major reason why so many companies are now going bust is that they were borrowing short-term money at the holding company-level to provide long-term equity to the special purpose vehicles that were set up to execute the project,” said Vijay Agrawal, executive director, Equirus Capital.

Take the example of Gammon India, which got a default rating in April 2016. In August that year, another well-known player in the sector, Shriram EPC, had its ratings suspended as it refused to share data with the rating firm, which subsequently downgraded it to default category in September last year.

Strained liquidity position due to delays in recoveries from customers and project execution delays resulting in holding of high inventory, which blocked working capital funds and caused cost-overruns were among the reasons cited by the rating firms at that time.

Cost conundrum 
Cost overrun for infrastructure projects worth over Rs 150 crore and above has been going up exponentially. As per the latest report of Ministry of Statistics and Programme Implementation, infrastructure projects have shown cost overruns to the tune of over Rs 3 lakh crore, owing to delays and other reasons.

From the original cost of implementation of Rs 15,72,066 crore, the anticipated completion cost is now seen at Rs 18,72,201 crore, ministry’s latest report for May, which was released recently said. This is up from the estimate of Rs 2.23 lakh crore as on April, according to the previous update released in September.

Another factor contributing to liquidity crunch is the money stuck in arbitration, which otherwise could have been paid to suppliers and sub-contrators.

Construction major HCC has, as on March 2018, arbitration claims amounting to Rs 4,823 crore, which it had won.&nbsp; 
While a pro-arbitration approach is now the order of the day, the Delhi High Court has earlier deprecated the practice of needless appeals filed by government companies against arbitral awards while delivering a judgement in a dispute relating to arbitration in the case of National Highway Authority of India and BSC-RBM-PATI joint venture.

“The court held that these appeals were filed only because the state had the financial wherewithal to do so,” an analyst tracking the sector said.

New models 
Things improved a bit, particularly for those operating in the road sector, with recalibrated PPP models, including the hybrid annuity and toll-operate-transfer brought in to replace other inefficient financing models. But here too, the shortsightedness of the private players would play a spoilsport.

“Hybrid annuity model bids have turned unviable, mainly due to aggressive bidding with bids going even below estimates of NHAI,” Agrawal said.

HAM was brought in as projects under the engineering, procurement and construction model (EPC) were facing significant delays and cost escalation, which hurt the margins of road developers. In EPC, the financial risk is significantly less as the government funds the project and provides regulatory clearances. Even projects under build-operate-transfer were not faring well.

Under HAM, 40% of the project cost is borne by the government (paid across first five years through annual payments/annuity) and the rest can be raised by the contractor via debt or equity.

The government, on its part, seems to be learning from its past experience in other sectors also. Similarly, for Railways, the new, revamped station redevelopment project unveiled by the government last week removes the restriction on the lease term of the contract from the earlier cap of 45 years and made it dynamic, depending upon the viability of the individual stations. The chances of recouping investments were made brighter with the inclusion of residential projects as well within the project area.

Public vs private 
The revival of private sector investment would remain the key to infrastructure sector companies getting out of the current mess. Crisil has predicted a further fall in overall infrastructure spending beyond 2018 if the private sector does not chip in.&nbsp;“Private sector here don’t have recourse to long-term funds needed for long gestation infra projects. So, it is left to either the government or long-term funds like overseas pension funds to support the sector,” Agrawal said.

Over-dependence on the government for infrastructure projects is bringing in its own share of troubles. NHAI accounts for 70% of all road investments, which, in turn, rely mainly on cess collected by the government. The authority has now been told to look for alternative sources like overseas borrowings.&nbsp;

Road developer SPML recently terminated its concession pact with the Rajasthan government for a road project due to what the company described as a breach of contract.

The sunny side 
SPML’s experience with the Rajasthan road project does not represent the state of health of completed road projects elsewhere. 
Take Bharat Road Network, country’s sole listed road portfolio. The company is witnessing an upswing in its fortunes with healthy growth in traffic across all its operating projects. In the first quarter of the current fiscal, toll revenue across the portfolio increased 9.6% on-year. “We are witnessing buoyancy in the road sector triggered by a healthy growth in traffic volume and high capex allocation for highway development across the country,” said Bajrang Kumar Choudhary. managing director, Bharat Road Network.

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A likely hike in infrastructure spending, particularly before the Lok Sabha election, heightened activity in the road sector, efforts to revive some of the stalled projects impacted by liquidity crunch and increased focus on rural infrastructure including irrigation would help infrastructure and construction companies survive the current crisis.

&nbsp;

Source: DNA Money

The infrastructure crisis has truly turned into a nightmare for the country - Project delays, costs overruns, stretched liquidity and cashflow mismatch triggered by unrealised payments, lack of access to long-term capital leading to over-dependence on short-term debt that leads to firms defaulting on their obligations.


Infrastructure sector in India is crumbling, even new models proving unviable; here is key to revival

The bankruptcy and insolvency law has finally caught up with Sudip Dutta, the promoter of Ess Dee Aluminium, whose incredible rags-to-riches story came to an end. Dutta, a migrant labourer in Mumbai, who went on to own a big chunk of the packaging industry he once worked for, is now re-entering the insolvency process with the revocation of a stay order his company managed to get from the Calcutta High Court.

With the stay order gone, the bankers can now set up the Committee of Creditors, the recent order of the Kolkata bench of National Company Law Tribunal (NCLT) said.

“The interim order is thereby vacated directing the Interim Resolution Professional to proceed with the CIRP (Corporate Insolvency Resolution Process) by constituting the CoC (Committee of Creditors) as per law,” Judge K R Jinan said in his October 4 order.

Some of the Rs 865 crore of loans given by banks to Ess Dee, half of which was lent by State Bank of India, may now be recovered.

In its order, NCLT has ruled that resolution process can’t be prevented just by paying off one of the many creditors of Ess Dee, which was one of the largest packaging suppliers to the pharma and the FMCG sector.

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“Here the State Bank of India which is representing the consortium bank already filed its claim and came forward to participate in the proceedings, which has been ordered to be initiated against the corporate debtor,” the NCLT order says.

“Admittedly, the settlement arrived at by the operational creditor and the corporate debtor is without the participation of other claimants who came forward subsequent to the public announcement. So their claims can’t be neglected for the reason that the corporate debtor has discharged its liability due to one of the operational creditors,” the order says.

Source: DNA Money

The bankruptcy and insolvency law has finally caught up with Sudip Dutta, the promoter of Ess Dee Aluminium, whose incredible rags-to-riches story came to an end. Dutta, a migrant&nbsp;labourer in Mumbai, who went on to own a big chunk of the packaging industry he once worked for, is now re-entering the insolvency process.

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Ess Dee Aluminium Sudip Dutta bankruptcy insolvency NCLT Calcutta High Court 

ICICI Bank has finally dragged scam-ridden Gitanjali Gems to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). DNA Money had on September 11 reported that ICICI Bank was taking initial steps of sounding out prospective resolution professionals for the likely move to NCLT.

The Mumbai bench of NCLT on Wednesday heard the case filed by Gitanjali’s banker, who argued that the company is a case “fit and proper to be referred to Corporate Insolvency Resolution Professional”.

ICICI Bank said Rs 608 crore was due from the company out of Rs 5,980 crore due to a consortium of 33 banks, including Punjab National Bank, Allahabad Bank, Bank of Baroda, Central Bank of India.

Name of Vijay Garg was suggested as the resolution professional.

ICICI Bank had in September floated Expression of Interest for prospective resolution professionals experienced in handling resolution of scam-tainted companies, DNA Money had reported. The move assumed significance because of the nature and scale of alleged frauds committed by the company management, which has led to involvement of Serious Fraud Investigation Office.

SFIO is expected to work in close coordination with the resolution professional following a recent landmark judgement of NCLT.

In the bankruptcy case of another disgraced company Rei Agro, the Kolkata-bench of NCLT directed the freeing of assets of the company from the Enforcement Directorate to be distributed among creditors, who collectively owns Rs 10,800 crore.

ICICI Bank was earlier depending on the Debt Recovery Tribunal or selling mortgaged assets through Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest, or Sarfaesi, Act to recover its money, and lenders had earlier ordered a forensic audit of the books of Gitanjali Gems which has now been completed.

Source: DNA Money

ICICI Bank has finally dragged scam-ridden Gitanjali Gems to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC). DNA Money had on September 11 reported that ICICI Bank was taking initial steps of sounding out prospective resolution professionals for the likely move to NCLT.


ICICI Bank wants its Rs 608 cr from Gitanjali Gems, takes action now

Shares of Bandhan Bank tanked 20% on Monday morning and stayed in the lower circuit for the rest of the day despite the management’s effort to allay investors’ concern over curbs put by sector regulator Reserve Bank of India. The central bank last week restricted Bandhan’s branch expansion and froze founder and managing director Chandra Shekhar Ghosh’s salary as penalty for missing the deadline for bringing down promoter stake to 40%, which is currently at double the desired level.

While these restrictions would have little material impact on the bank’s current level of operations and near future growth, as explained by the management on Saturday, investors weren’t impressed and dumped the stock as soon as the market opened.

Bandhan has aggressively expanded its branch network to 937 in a short time leading to suboptimal level of 3,000 customers per branch compared to 20,000-25,000 customers for many of its peers.

And Ghosh has no immediate reason to demand a salary hike.

But bringing down promoters’ stake by almost half of current level, likely strain on current margins due to business acquisitions and recent failure to acquire PNB Housing Finance are some of the reasons being cited by experts for investors staying away from the stock. 
As per the universal banking licensing condition for Bandhan Bank, shareholding of Non Operative Financial Holding Co (NOFHC) was to be brought down to 40% within three years from August 2015.

However, the NOFHC was unable to adhere to the condition and currently holds 82% in the bank.

As a way out, Bandhan can go for inorganic growth, which will reduce the promoter stake in the bank, or pursue non-banking business under NOFHC, leading to dilution of promoters’ holding or stake dilution through fresh issue or stake sale by NoFHC directly.

“Any of these events of acquisition can be margin and Return on Asset dilutive to some extent while bringing down stake can be highly EPS and RoE dilutive,” said ICICI Securities, but added that profits may surge with size acquired through business acquisition.

“The bank is taking necessary steps to comply with the licensing condition to bring down the shareholding of NOFHC in the bank to 40% and shall continue to engage with RBI in this behalf,” Bandhan had said while responding to RBI directive. Stake dilution would be a long drawn process, said analysts, requiring time consuming approval of the regulator.

“Promoters have a mandatory one-year lock-in period after the IPO in which they cannot sell their shares. Now the dilemma for the bank is that the promoter has to sell 42.28% stake to fulfil RBI’s regulatory requirement, but again they can’t sell a single share till next six months as per Sebi’s IPO rules,” HDFC Securities said.

Source: DNA Money

Shares of Bandhan Bank tanked 20% on Monday morning and stayed in the lower circuit for the rest of the day despite the management’s effort to allay investors’ concern over curbs put by sector regulator Reserve Bank of India.&nbsp;

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Bandhan Bank MD Chandra Shekhar Ghosh salary capped, expansion forzen; shares crash 20%

Public sector entity Hindustan Copper is set to come out with its maiden qualified institutional placement (QIP) and would soon appoint a merchant banker. The Rs 1,400 crore QIP would help country’s only copper miner to fulfil the equity component of its Rs 5,500 crore capex and in meeting the minimum public shareholding of 25% for listed entities as the current holding is at 23.95%.

“To meet the revised target of 20 million tonne (per annum), we need capital expenditure to the tune of Rs 5,500 crore. Out of this requirement, we plan to raise Rs 1,400 crore from qualified institutional placement. The pricing is to be decided by the merchant banker which is to be appointed very soon after the annual general meeting,” chairman-cum-managing director Santosh Sharma told shareholders during the meeting.

Cabinet Committee on Economic Affairs had given its approval for issue of 13.87 crore equity shares to the extent of 15% of paid-up equity capital of Hindustan Copper through QIP route. “This will also help the company achieve the minimum public shareholding of 25%,” Sharma added. While Rs 3,500 crore of capex requirement would be raised via QIP and debt, the balance would come from internal accruals, he said.

“During next five to six years, internal accrual generation would be around Rs 2,300 crore. So, there would be a gap of Rs 3,200 crore for our capex plan of Rs 5,500 crore. This gap would be funded by a mix of debt and equity,” he said. Apart from getting shareholders’ nod for QIP, the firm has also raised borrowing limit to Rs 1,500 crore from Rs 800 crore through an enabling resolution.

“Our expansion plan to increase production capacity to 12.4 million tonne was reviewed by the government in the context of the huge gap between supply and demand of copper mineral in the country and it was felt that the company has a potential for growth, and with the infusion of capital, it can further increase its mine production. The current mine expansion plan has been increased from 12.4 to 20 million tonne, an increase of around six times from our present production capacity in the next six years,” he said.

As a part of its existing expansion plan, Hindustan Copper has already reopened two of the closed mines, issued tender for construction and operations of Chapri-Sidheswar mine at Ghatsila in Jharkhand of capacity 1.5 million tonne. For the flagship Malanjkhand underground mine in Madhya Pradesh, which has a capacity of 50 lakh tonne, 50% of physical progress has been completed. “Plans have been firmed up to commence ore production from the underground mine in the coming fiscal year. Likewise, tender would be floated for expansion of Surda (Jharkhand) mine soon,” he said.

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Efforts are on for geophysical survey of all its mines to give an idea of their future potential.

Source:DNA Money

Public sector entity Hindustan Copper is set to come out with its maiden qualified institutional placement (QIP) and would soon appoint a merchant banker.


To meet capex, MPS requirements, Hind Copper eyes Rs1,400 cr QIP

Kolkata: Rashtriya Ispat Nigam Ltd (RINL), which doubled its production capacity to about 7.2 million tonne per annum last fiscal, is facing a key challenge of raw material insecurity as it doesn’t own any iron ore mine. The public sector undertaking is in talks with the Odisha government for earmarking a specific mine for it. Besides, it is taking efforts to restart some of the mines of its subsidiary Orissa Minerals Development Company (OMDC) where leases lapsed long back, Pradosh Kumar Rath, its newly-appointed chairman told DNA Money.

“Now that we have raised our capacity, ramping up of production would be our key focus this year. There is adequate demand in the market, we only have to produce it. But the most difficult issue currently is how to cope up with that higher volume of production. There are several challenges including the availability of raw materials. Now that scale of operations has more than doubled, the issue is how to secure iron ore logistically for such scale of operations,” Rath, who took over as the head of Visakhapatnam-based RINL last week, said.

RINL, also known as Vizag Steel, which runs country’s first coastal steel plant, is devoid of any captive iron ore mine. It has been sourcing most of the key raw material from state-run Odisha Mining Corp and also National Mineral Develop Corp.

To give RINL raw material security, the steel ministry helped the company take over another state-owned entity, OMDC, in 2011. While OMDC owns several iron ore mines, all its mining leases were lapsed and have not been revived yet, adding to RINL’s woes.

“An important task for us is how to operationalise the iron ore mines of OMDC, a company which we had acquired paying Rs 360 crore,” he said during his first media interview after taking over as chairman.

As a way out, RINL is in talks with Odisha Mining Corp for getting access to Gandhamardan iron ore mine in Keonjhar district.

“We have been getting our requirement from OMC but they sell mostly through e-auctions where we have to participate. But they also have a mine at Gandhamardan for which we are tying up on a trial basis. A mine in Andhra Pradesh has been allotted through the joint venture route. That may take a year to get clearances and start operations,” he said.

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Despite the troubles, the recent upswing in steel demand has helped RINL cut its losses and the state-run entity might be able to post good profits this year.

“After suffering losses, we have shown a profit of Rs 17 crore in the first quarter and hope to continue with the trend for the rest of the year,” Rath said.

In the financial year (FY) 2018, RINL suffered losses of Rs 900 crore.

Rashtriya Ispat Nigam Ltd, also known as Vizag Steel, which runs country’s first coastal steel plant, is devoid of any captive iron ore mine.


Sumit Moitra