Tag: SREI

SREI Infrastructure Finance Ltd stuck in 5% lower circuit as RBI supersedes co’s Board

Banking & Finance

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The shares of SREI Infrastructure Finance Limited (SIFL) were locked in the 5 per cent lower circuit during the morning trade on Tuesday after the Reserve Bank of India superseded the Board of Directors of SIFL and SREI Equipment Finance Limited.

The shares of SIFL opened at ₹8.17, down ₹0.43 or 5 per cent on the BSE as against the previous close of ₹8.60 and were locked in the 5 per cent lower circuit post opening.

It was trading at ₹8.20 on the NSE, down ₹0.40 or 4.65 per cent.

The Reserve Bank superseded the Board of Directors of SIFL and SEFL owing to governance concerns and defaults by the aforesaid companies in meeting their various payment obligations, as per a regulatory filing.

Rajneesh Sharma, Ex-Chief General Manager, Bank of Baroda, has been appointed as the Administrator of the aforesaid companies.

“The Reserve Bank also intends to shortly initiate the process of resolution of the above two NBFCs under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would also apply to the NCLT for appointing the Administrator as the Insolvency Resolution Professional,” it said.

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RBI appoints advisory committee to assist administrator of 2 Srei group firms, BFSI News, ET BFSI

Banking & Finance

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After superseding the boards of Srei Infrastructure Finance Limited (SIFL) and Srei Equipment Finance Limited (SEFL) on Monday, the RBI has appointed a three-member Advisory Committee to assist the administrator of the two crisis-ridden firms. The Reserve Bank of India (RBI) superseded the board of directors of SIFL and SEFL and appointed Rajneesh Sharma, ex-chief general manager, Bank of Baroda, as the administrator.

“The Reserve Bank…has constituted a three-member Advisory Committee to assist the Administrator in discharge of his duties,” the central bank said in a statement.

The members of the Advisory Committee are — R Subramaniakumar (former MD and CEO, Indian Overseas Bank), T T Srinivasaraghavan (former managing director, Sundaram Finance Limited), and Farokh N Subedar (former chief operating officer and company secretary, Tata Sons Limited).

The Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 provide for the concerned financial sector regulator appointing a Committee of Advisors to advise the administrator in the operations of the financial service provider during the corporate insolvency resolution process.

Srei group, which mainly caters to the MSME and infrastructure sectors, owes around Rs 18,000 crore to around 15 lenders, including Axis Bank, UCO Bank and State Bank of India, and another nearly Rs 10,000 crore of external commercial borrowings and bonds. PTI NKD ABM ABM



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Sensex, Nifty end lower today; banks, financials fall, ICICI Bank, SBI Life among top laggards, BFSI News, ET BFSI

Personal Finance

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Domestic equity indices ended in the red on Monday, with BSE Sensex down 0.2% at 58,177 points and Nifty 50 down 0.08% at 17,355. Mid and smallcap stocks outperformed the market today, with BSE Midcap index closing 0.32% higher and the smallcap index ending with a gain of 0.80%.

Nifty Media, Nifty Metal and Nifty Realty were among the other indices rose today. The remaining sectoral indices fell, which includes Nifty Bank Index and Nifty Financial Services down 0.58% and 0.19%, respectively.

ICICI Bank, HDFC Bank and SBI Life Insurance were the top laggards among Sensex stocks. While Kotak Mahindra Bank, Bajaj Finserv, Chola Invest and Power Finance emerged were among the top gainers in the index.

Stock Talk

SBI Life Insurance Company:

Canada Pension Plan Investment Board has offloaded 2.3 crore equity shares in SBI Life at Rs 1,171.07 per equity share, while BNP Paribas Arbitrage bough 96,35,692 equity shares at Rs 1,171 per share on BSE, the bulk deals data showed.

Punjab National Bank:

The board has approved raising Rs 6,000 crore through issue of Basel III additional Tier-1 (AT-1) bonds or Tier II bonds or combination of both in one or more tranches.

Indiabulls Housing Finance:

The company has received approval from the Competition Commission of India to divest its mutual fund business and sell it to Groww for Rs 175 crore

Other key takeaways

SREI’s Rs 35,000-crore loan may be classified as NPA

Banks may classify Rs 35,000 crore loan given to SREI group as Non Performing Asset (NPA) by the end of this quarter after the National Company Law Tribunal (NCLT) set aside the previous order restraining banks from such classification.

According to analysts’ estimates, Indian Bank and Canara Bank have exposures of ₹2,000 crore and ₹1,200 crore, respectively, to Srei group, while ICICI Bank and Axis Bank have ₹800 crore each.

India’s inclusion in global bond index to attract $170-250 bln inflows

India could be included in the global bond index early 2022, which can attract $170-250 billion in bond inflows in the next decade, said Morgan Stanley in a recent note.

Investors have been staying away from the Indian bond market for the past few years, given the widening fiscal deficit, above-target inflation and gradual weakening currency. However, recent macroeconomic stability could change early next year, according to analysts at Morgan Stanley.

US Markets

Wall Street ended sharply lower on Friday as investors weighed signs of higher inflation. Shares of Apple Inc tumbled following an unfavorable court ruling related to its app store.

The Dow Jones Industrial Average index fell 0.78% to close at 34,607.72 points, while the S&P 500 lost 0.77% and closed at 4,458.58. The Nasdaq Composite dropped 0.87% to 15,115.49.

Gold prices subdued as firm dollar dims safe-haven appeal

Gold prices were subdued on Monday as the dollar held firm, while cautious investors awaited readings on U.S. consumer prices due this week that could be crucial to the Federal Reserve’s decision on when to exit its super-supportive policy. Spot gold was flat at $1,787.40 per ounce after having recorded a weekly decline of 2.1%.

Market Outlook for the week ahead

-Nifty has been in a narrow range for the last 5 days and any breakout above 17,450, with above average volumes, may take Nifty to 17,550 levels. According to experts, Traders are advised to book profits if Nifty gives a daily close below 17,250 level.

-The market is expected to turn stock specific, and the Nifty will undergo a healthy consolidation this week, making it prudent to stick to the buy on decline strategy to accumulate quality stocks.

-As Nifty is not expected to breach 16900 in its consolidation phase, dips towards psychological level of 17000 would offer incremental buying opportunity in this week

– Bank Nifty is expected to form a higher base above the upper band of the recent range breakout area (36200). Experts stick with a positive stance with Bank Nifty gradually heading towards 37700 levels in September. Any breather in the coming week would offer an incremental buying opportunity in quality banking stocks.



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Srei Equipment Finance gets EoI from Makara Cap for ₹2,200-cr investment

Banking & Finance

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Srei Equipment Finance Ltd (SEFL), a wholly owned subsidiary of Srei Infrastructure Finance Ltd, on Friday said that it has received a term sheet from Makara Capital Partners Pte. Ltd, Singapore, indicating interest for an estimated investment of around ₹2,200 crore.

The investment will be through subscription to equity shares and other securities of the company subject to the terms and conditions in the said term sheet, the company said in a notification to stock exchanges on Friday.

“This is to inform that the Strategic Coordination Committee (SCC) has received a Term Sheet from Makar), Singapore indicating interest for investment of an aggregate amount of ₹2,200 crores by subscription to equity shares and other securities of the company subject to the terms and conditions contained in the said Term Sheet. The SCC chaired by an independent director, will evaluate the said offer and make the recommendation to the Board of the company,” it said.

SEFL had earlier in April this year received an expression of interest (EoI) for capital infusion from Cerberus Global Investments B.V. It had also received expression of interest for up to $250 million (approx ₹1,865 crore) capital infusion from international private equity funds including US-based Arena Investors LP and Singapore’s Makara Capital Partners.

Infusion to provide cushion

The SCC has been running an independent process for investments in SEFL and many large players have evinced interest. The proposed capital infusion, which is being carried out in parallel to the company’s debt realignment plan, is expected to provide cushion against the pandemic induced stress in the Indian financial services space, the company had said.

Ernst & Young is advising the SCC on the fundraising exercise.

Meanwhile, Srei Infrastructure Finance Ltd had, in April this year, appointed KPMG Assurance and Consulting Services LLP and DmKH & Co. as forensic auditors for its proposed debt restructuring plan.

Kolkata-headquartered Srei group has a total debt outstanding of nearly ₹27,000 crore which includes ₹18,000 crore outstanding to as many as 15 lenders including SBI, Axis Bank and UCO Bank among others. The company has been facing cash flows issues in the wake of the Covid-19 pandemic-driven economic stress.

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After KPMG, DmKH & Co appointed as another forensic auditor of Srei

Banking & Finance

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The Kolkata-headquartered Srei group owes nearly Rs 18,000 crore to as many as 15 lenders, including SBI, Axis Bank and UCO Bank.

After the appointment of KPMG as a forensic auditor of Srei Infrastructure Finance as proposed by its lenders for proposed debt realignment plans, the company has also hired another forensic auditor, DmKH & Co, as per the advice of the independent directors as good governance.

Notably, the Reserve Bank of India (RBI) appointed an auditor in November last year to conduct a special audit of Kolkata-based NBFC Srei Infrastructure Finance and its wholly-owned subsidiary Srei Equipment Finance (SEFL), one of the major players in the construction and mining equipment financing space.

Earlier, Srei proposed a debt restructuring as it stated that the outbreak of Covid-19 created an unprecedented situation and payments of its borrowers had been stuck. The lenders, however, proposed appointment of a forensic auditor before approving the debt realignment plans. And, accordingly, they named KPMG for conducting the forensic audit.

In a stock exchange filing on Saturday, Srei Infrastructure Finance said, “This is to inform that the board at its meeting held on April 23, 2021, noted the appointment of KPMG Assurance and Consulting Services LLP and DmKH & Co. as the Forensic Auditors of the company as advised by the bankers as step towards the proposed debt realignment plan and by the Independent Directors of the company as good governance respectively.”

Srei has a consolidated debt of around Rs 20,000 crore from Indian banks and around Rs 10,000 crore through bonds and from other financial institutions. Last month, the board of Srei Equipment Finance (SEFL) had constituted a Strategic Coordination Committee (SCC), comprising of Independent Directors, to coordinate, negotiate and conclude discussions with potential strategic and/or private equity investors, to raise fresh capital for the business in consultation with the management.

On Saturday, SEFL said it has received an expression of interest (EoI) for capital infusion from US-based Cerberus Global Investments B.V. Earlier, SEFL also received EoIs for capital infusion of about USD 250 million from US-based multi-strategy investment firm Arena Investors LP and Singapore-based global financial services company Makara Capital Partners. “SEFL has proceeded with discussions with both Arena Investors and Makara Capital and the company’s Strategic Coordination Committee, chaired by independent director Malay Mukherjee, is currently engaged in discussions with the private equity (PE) funds to bring capital into the business,” according to statement issued.

Significantly, Srei Equipment Finance had approached National Company Law Tribunal (NCLT), Kolkata with a Scheme of Arrangement which proposes arrangement with six types of creditors i.e., secured debenture holders, unsecured debenture holders, secured external commercial borrowings (ECB) holders, unsecured ECB holders, perpetual debt instrument (PDI) holders and individual debenture holders (including such debt transferred from SIFL pursuant to slump exchange). “The Scheme of Arrangement broadly proposes moratorium in terms of coupon payments during January 1, 2021 to June 30, 2021 along with postponement of redemption dates based on the type of creditor,” Care Ratings said in a note on the company on March 6, 2021. Consequent to the Scheme of Arrangement proposed by the company, NCLT, Kolkata passed an order dated December 30, 2020.

As per the NCLT order, the meeting of secured debenture trustees/holders, unsecured debenture trustees/holders, secured ECB lenders, unsecured ECB lenders, PDI holders, debenture trustees representing individual debenture holders will be held on May 15, May 29, June 12, June 26, July 10, July 24, 2021, respectively for the purpose of their considering, and if thought fit, approving, with or without modification, the said Scheme of Arrangement, according to the Care Ratings note.

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Srei reports whopping loss of Rs 3,810cr in Q3, BFSI News, ET BFSI

Banking & Finance

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Srei Infrastructure Finance Ltd on Sunday said it has posted a consolidated net loss of Rs 3,810 crore during the third quarter of the current fiscal on account of higher and accelerated provisioning as a prudent measure. The company had reported a net profit of Rs 60 crore in the year-ago period.

Its revenue from operations for the October-December period of the current fiscal stood at Rs 490 crore as against Rs 1,450 crore in the corresponding quarter last year.

The company said its total consolidated provisioning was at Rs 3,100 crore for the period under review and the net worth stood at Rs 296 crore as of December quarter of FY21.

The Kolkata-based company claimed that the COVID-19 pandemic had impacted its recovery, leading to an asset- liability mismatch.

“The current financial year has been one of the most challenging years in our history of more than three decades.

“The COVID-19 induced stress on our asset quality coupled with the credit squeeze in the NBFC sector has created an unprecedented situation. As a matter of prudence…we have decided to increase our provisions significantly,” Srei chairman Hemant Kanoria said.

The lender had in November 2020 said a special audit of the company and its subsidiary, Srei Equipment Finance Ltd, was undertaken by an auditor appointed by the Reserve Bank of India.

A special audit is typically undertaken if there is a sharp deterioration in the quality of a lender’s book.



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