India

In a related story, Bloomberg News reported that four years into one of the biggest, longest unwindings in India’s corporate history, tycoon Anil Ambani found himself in a familiar place Monday: Presenting shareholders with another plan to sell off assets and pay debt. His Reliance Group is planning to pay creditors 150 billion rupees ($2.1 billion) more by March, the embattled executive told investors on Monday in Mumbai. Financial unit Reliance Capital Ltd., whose credit rating was downgraded to default by local firms this month, will exit its lending business, he said.

Mounting debt failures in India have been catching rating companies off guard, underscoring continued challenges a year after the landmark failure of shadow bank IL&FS increased scrutiny of the industry, Bloomberg News reported. Defaults at companies including Dewan Housing Finance Corp., Cox & Kings Ltd. and Altico Capital India Ltd. have occurred even as their long-term ratings indicated very low to moderate risk of non-payment. “Raters have not been able to detect stress in time,” said Ashutosh Khajuria, chief financial officer at Federal Bank Ltd.

The dedicated bankruptcy court, the National Company Law Tribunal (NCLT), ordered that insolvency proceedings be started against Mumbai-based real estate developer Lokhandwala Infrastructure under Section 7 of the Insolvency and Bankruptcy Code (IBC), The Economic Times reported. The Mumbai bench of NCLT restricted the developer from creating any third-party rights or disposing of any assets. This is the second major city-based real estate developer after HDIL which has been referred for the insolvency resolution process under the IBC.

Between August 2017 and September 2017, HDFC had sold over 28 lakh pledged equity shares of Religare for a net value of Rs 12.81 crore and 10 lakh pledged shares of Fortis Healthcare for a net value of Rs 14.53 crore, The Financial Express reported. The Supreme Court on Friday agreed to hear HDFC’s appeal seeking to initiate insolvency proceedings against RHC Holding, an entity promoted by billionaire brothers Malvinder Mohan Singh and Shivinder Mohan Singh for recovery of `41 crore.

India’s top mutual funds risk running afoul of the country’s securities regulator for granting more time to media mogul Subhash Chandra for repaying nearly a billion dollars in debt, Bloomberg News reported. Shares of the group’s flagship Zee Entertainment Enterprises Ltd. have steadied since hitting a five-year low Monday after the group said the money managers had agreed to extend the repayment timelines on obligations due by September-end. What’s unclear is how the extension will be looked at by the regulator, who in June invalidated pacts between funds and their borrowers.

Indian media giant Essel Group, run by industry mogul Subhash Chandra, is seeking an extension to repay debt in order to avoid creditors liquidating its shares, Bloomberg News reported. The company faces a month-end debt repayment deadline. If that’s not met, creditors can sell shares in the group’s flagship Zee Entertainment Enterprises Ltd. kept as collateral against loans. The case highlights broader risks that borrowings backed by stock pose to the equity market. There’s a lot at stake with share-backed loans currently at about 1.9 trillion rupees ($26.5 billion).

India’s unexpected $20bn corporate tax cut, unveiled last week as the country battles a sharp economic slowdown, has triggered euphoria among business chiefs and equity investors, the Financial Times reported.

The Reserve Bank of India would prefer a market-led resolution to the nation’s simmering shadow banking crisis, Governor Shaktikanta Das said, dashing hopes for bailouts in the struggling sector, Bloomberg News reported. “We are monitoring the top 50 non-bank finance companies, which account for 70%-75% of the sector loans outstanding,” Das said at the Bloomberg India Economic Forum in Mumbai late Thursday.

Reliance Capital Ltd.’s downgrade to default grade at Care Ratings Ltd. places the debt of embattled tycoon Anil Ambani’s conglomerate at risk, reigniting India’s credit scare, Bloomberg News reported. Mumbai-based Care cut Reliance Capital’s bonds by eight notches to D from BB, citing a delay in coupon payments on several of the lender’s non-convertible debentures, the rating company said in a Sept. 20 statement. Reliance Capital group’s debt stood at about $5 billion as of September, according to a company’s spokesman.

The introduction of GST has been described as India’s biggest tax reform, and the Insolvency and Bankruptcy Code (IBC) is a landmark contemporary law that has just begun to be assessed for efficacy, The Financial Express reported. While GST subsumed various indirect tax payments into one, reducing the compliance burden on the taxpayers, IBC reduced the number of days needed to liquidate a company. IBC is also expected to resolve the prevailing non-performing asset crisis, which would positively impact availability of bank credit in the long term.