Reliance Home Finance narrows net loss to Rs 284cr in Jul-Sept, BFSI News, ET BFSI

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New Delhi, Reliance Home Finance on Thursday reported narrowing of its net loss to Rs 284.49 crore for the quarter ending September. The company had reported a net loss of Rs 574.40 crore in quarter ended in September 30, 2020.

Total income during the July-September quarter of 2021-22 was down by 73 per cent to Rs 70.76 crore, as against Rs 259.11 crore in the same period of 2020-21, Reliance Home Finance said in a regulatory filing.

The company’s independent auditor Tambi & Jaipurkar, in its review report said that the company has defaulted on the payment of borrowing obligations amounting to Rs 8,607.16 crore as of September 30, 2021 and its asset cover has also fallen below 100 per cent of outstanding debentures to Rs 5,967 crore.

The company’s ability to meet its obligation is dependent on material uncertain events including restructuring of loan portfolio, implementation of resolution plan by inter creditor agreement for the resolution of its debt under the ICA and revival of housing finance. The financial results of the company have been prepared by the management on a going concern basis.

“Our conclusion is not modified in respect of this matter,” the auditor said.

The company said it has cash on hand of about Rs 2,220 crore in the form of investment in liquid mutual fund and fixed deposits. However, there is delay in debt servicing on the back of a November 2019 order passed by Delhi High Court, which bars the company from disposing off its assets.

“The company is engaged with its lenders for arriving at the debt resolution plan. In this regard, certain lenders of the company have entered into an Inter-Creditor Agreement (ICA)…The ICA lenders have evaluated, voted upon and selected Authum Investment & Infrastructure as the final bidder on June 19, 2021,” it said.

In view of the resolution process being in the final stages, the accounts of the company have been prepared on going concern basis, it added.



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Bankers of McLeod Russel sign ICA for resolution on debt recast, BFSI News, ET BFSI

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Bulk tea major McLeod Russel India on Friday said its bankers have signed an Inter Creditors Agreement (ICA), a precursor to a resolution plan for debt restructuring, that rekindled hope of revival of the once largest tea producer of the world. After the promoters of McLeod reach a settlement with a financial creditor, Techno Electric & Engineering, the company could be out of National Company Law Tribunal‘s insolvency process.

The trigger for the insolvency application by Techno was a loan agreement for providing Rs 100 crore inter-corporate deposit (ICD).

“We hope to reach a satisfactory resolution shortly with the bankers on debt recast,” a McLeod official told PTI.

“All the banking lenders have signed/executed an Inter Creditors Agreement (ICA) to provide for ground rules for finalisation and implementation of Resolution Plan in respect of borrower/Company”, McLeod Russel said in a stock exchange filing.

There are nearly 8-10 lenders including a combination of private and public-sector banks, such as Axis Bank, UCO Bank, Allahabad Bank, Indusind Bank and ICICI Bank.

The outstanding debt including interest will be around Rs 2100-2300 crore, company officials estimated which is not sustainable for the tea major.

Till March 2018, McLeod had 52 estates in the country producing 67 million kg of tea with a total saleable production of 89 million kg. By FY20, its total saleable quantity had dropped by nearly 53 per cent to 42 million kgs with the company selling estates to square off debts.

A slew of ICDs – unsecured borrowings from other entities – extended to some of the other BM Khaitan group companies, hurtled the tea major into a serious crisis. PTI BSM NN NN



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ICAs signed for all assets going to NARCL in first tranche: SBI

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State Bank of India (SBI) chairman Dinesh Khara

Inter-creditor agreements (ICAs) for all the assets identified for transfer to the National Asset Reconstruction Company (NARCL) in the first round have been signed, State Bank of India (SBI) chairman Dinesh Khara told FE in an interview.

In terms of the shareholding of NARCL, private-sector banks have come forward and they are in the process of obtaining the requisite approvals in order to invest in the entity, Khara said.

“So they are fully on board and in all those accounts where ICAs have been signed, there is a consensus among banks that all such accounts will move into NARCL,” Khara said, adding that irrespective of ownership, assets would get aggregated. “All those who have signed ICAs would be happy to have the assets aggregated and move them towards resolution,” he said.

An ICA is an agreement signed between the lenders to a company as a sign of their commitment to ensure a common resolution of the stress built up in that company.

The NARCL has been set up with a paid-up capital of Rs 149 crore, all of which has come from eight public-sector banks. Banks are understood to have identified 22 accounts with a total outstanding of Rs 89,000 crore for transfer to the NARCL in the first tranche. Eventually, the bad bank is expected to acquire assets worth Rs 2 lakh crore from lenders. Sector analysts say that the aggregation of the exposures of several lenders is the chief advantage of the NARCL.

“The chances of resolution improve when you club together all the piecemeal exposures of each bank into a single asset. The assets identified in the first tranche are very old ones where private banks have anyway made an exit. So aggregation shouldn’t face too many challenges,” said an analyst.

“One of the challenges for resolution was that each bank had a different kind of charge attached to the same asset. Aggregation through the NARCL takes care of that problem,” said Ashvin Parekh, managing partner, Ashvin Parekh Advisory Services (APAS). “We must hope now that the NARCL is steered competently by the management so that there is actual resolution of stress,” he added.

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