India

JSW Steel Ltd., India’s biggest producer, is interested in snapping up two struggling rivals, Bhushan Steel Ltd. and Monnet Ispat & Energy Ltd., as part of an industry-wide wave of consolidation sparked by a new bankruptcy law designed to clear-out distressed assets, Bloomberg News reported. The Mumbai-based company will partner with Japan’s JFE Holdings Inc., which holds a 15 percent stake in JSW Steel, and other investors to bid for the assets, Sajjan Jindal, chairman of JSW Group, said in an interview with BloombergQuint at the World Economic Forum’s meeting in Davos.

State Bank of India, the nation’s largest lender, sees provisioning for soured debt as the biggest challenge for the South Asian nation’s banking system even as credit growth is reviving from a three-decade low, Bloomberg News reported. “Whatever process we resort to for the resolution of non-performing assets there will be a gap in the provisioning,” Chairman Rajnish Kumar said in an interview with Bloomberg Television’s Haslinda Amin on the sidelines of the World Economic Forum in Davos on Tuesday. "That is precisely where the support from the government is required.

A company connected to an advisory firm to the family of businessman Sean Quinn is allegedly behind the “cash extraction” of some $15 million (€12.26 million) from an Indian company in a number of bogus transactions, it has been claimed at the Commercial Court, the Irish Times reported. The alleged extraction is part of a scheme designed to put $455 million in Quinn group assets beyond the reach of Irish Bank Resolution Corporation (IBRC), it is claimed.

India’s $207 billion bad loan pile could get worse, Bloomberg News reported. Delinquencies are rising in the affordable housing sector, a pet project for Prime Minister Narendra Modi that’s touted as a main growth driver for Asia’s third-largest economy. Most of these were loans below 200,000 rupees ($3,100) made to some of the poorest Indians, whose incomes are now under threat as economic expansion slows. "Loan defaults have been the largest and are rising in the smaller ticket sizes, creating our own subprime class," said Nilanjan Karfa, analyst at Jefferies India Pvt.

India is likely to consider expanding its bankruptcy law to include cross-border insolvency, which helps lenders tap defaulters' assets overseas, as a top panel at the Insolvency and Bankruptcy Board of India (IBBI) meets Thursday to help strengthen the framework dedicated toward recovering bad loans, the Economic Times reported. "Cross-border insolvency is on top of the agenda. The authorities are keen to make that happen as there is no provision under the Insolvency and Bankruptcy Code (IBC) for it," an executive privy to the matter told ET.

The Mumbai bench of NCLT on Tuesday granted the resolution professional of debt ridden steel company Monnet Ispat and Energy an extension of 90 days to complete its insolvency resolution process as the initial 180 days were to expire on January 13, the Economic Times reported. The extension will give the resolution practitioner and lenders more time to negotiate with JSW Steel on the terms of the resolution plan submitted by them to acquire the company. A consortium of Aion Capital Partners and JSW Steel had emerged as the sole bidder for Monnet.

Insolvency professionals are flummoxed by the latest rule from the Insolvency and Bankruptcy Board of India that prohibits them from outsourcing the work related to resolution of a bankrupt company, The Economic Times reported. "All the assignments in which delegation of authority has taken place by the insolvency professional even if it is with the approval from the Committee of Creditors, the same has to be given a hard relook after this circular," said Mamta Binani, former president of the Institute of Company Secretaries of India, and an insolvency professional herself.

Tata Steel, Vedanta, Edelweiss ARC, and Renaissance Steel India are likely to have submitted resolution plans for Electrosteel Steels, one of the 12 companies mandated by the Reserve Bank of India (RBI) for insolvency, Business Standard reported. The last date for submitting resolution plans was Thursday. A Tata Steel spokesperson said: “As a process, we do assess and evaluate various strategic opportunities for growth. This is an ongoing process in the company.” An e-mail sent to Vedanta went unanswered while Edelweiss did not comment.

Things are looking up for investors in billionaire Anil Ambani’s Reliance Communications Ltd. after the Indian phone company staved off insolvency by agreeing to sell assets to the chairman’s brother, Bloomberg News reported. But lenders still face a potential hit on their earnings. That’s the view of some observers including Pavitra Sudhindran, credit analyst at Nomura Holdings Inc., who warns that provisions connected with nonperforming loans could sting. “That could hurt their earnings, though we don’t know the extent of the provisions they have already made and are yet to make,” she said.

India’s parliament on Tuesday approved amendments to the Insolvency and Bankruptcy Code Bill to bar owners of defaulting firms from bidding to buy back assets when they are auctioned as part of bankruptcy proceedings, Reuters reported.