Each time there is a failure, whether Satyam or IL&FS, we find regulators failed, as did auditors, boards of firms, etc The collapse of Yes Bank is yet another black mark for India Inc. As the news unravels, one wonders what there is to applaud about the country's entrepreneurship skills given the large number of businesses-big and small-that have come undone in the past few years. Without doubt, there have been some tremendous success stories, and several world beaters have been built. But, for every Infosys, Wipro, HDFC Bank, or a Kotak Mahindra Bank there is a Satyam Computer, Bhushan Steel, or an Essar Steel.
India's shadow banking sector seems to be coming out of its blues and banks have opened their credit tap. However, the bond markets continue to be suspicious as some non-banking finance companies (NBFCs) continue to default or are struggling to get buyers in resolution processes. NBFCs are certainly not as flush with liquidity as they were in the pre-IL&FS period, but Reserve Bank of India (RBI) Governor Shaktikanta Das said on Tuesday that the stress had been contained to three-four large firms, from 10-12 a few months ago.
THE NATIONAL Company Law Appellate Tribunal (NCLAT) on Wednesday dismissed a plea moved by audit firms Deloitte Haskins & Sells and KPMG arm BSR & Associates, as well as their independent directors, against impleadment in an ongoing investigation in their role in the alleged fraud at the debt-laden Infrastructure Leasing & Financial Services Limited (IL&FS). In its ruling, the NCLAT said that the judgment of the National Company Law Tribunal (NCLT) could not be termed as illegal and that the tribunal was empowered to pass order to implead the auditors as well as independent directors if "it forms opinion that the affairs of the company have been conducted in a manner prejudicial to the public interest".
The Hongkong and Shanghai Banking Corp. (HSBC) Ltd has moved a winding-up petition against a subsidiary of IL&FS Transportation Services Ltd (ITNL) in a Singapore court to recover dues of Rs l,060 crore, information from the Singapore government gazette showed. HSBC is seeking to recover its investment in ITNL Offshore Pte. Ltd's bonds maturing in 2021, this is the first such case against the firm filed by an overseas lender. The case will be heard on 20 March.
Lenders to bankrupt infrastructure financier IL&FS have cleared the sale of three road projects that would fetch them nearly Rs 6,250 crore. The committee of creditors approved the sale of Chenani-Nashri Tunnel to Cube Highways with a vote of over 90 % . While the sale of Pune Sholapur Road to Italy-headquartered Autostrade was cleared with a vote of 84 % and Jorabat Shillong Expressway will be sold to Edelweiss-backed Sekura Roads with a 100 % vote. IL&FS confirmed that it had received lenders' approval for sale of these projects.
Mumbai-based Business Conglomerate Shapoorji Palonji Group and two other companies have evinced interest for construction of Gujarat's first tech park to be developed at Gujarat International Finance-Tech (GIFT) city situated on the outskirts of state capital Gandhinagar. "State owned Gujarat Industrial Development Corporation (GIDC) is promoting the Rs 300 crore tech park project. Apart from Shapoorji Palonji Group, two other Gujarat based companies PSP projects and Cube Construction are in the race for the construction of nearly 6 lakh sq ft space in GIFT City;" said a senior official with the state government.
A forensic report on the finances of IL&FS Transportation Networks India (ITNL) has alleged the involvement of the earlier management of defaulting financier IL&FS, the parent of the roads company; in suspected money laundering of more than Rs 6,500 crore, sources close to the probe told ET. The report names former chairman Ravi Parthasarathy as the 'prime mover' and indicates that in at least 14 special purpose vehicles (SPVs) linked to ITNL, costs were deliberately inflated through delays using a using a maze of shell and dummy companies to make the projects eventually untenable.
The National Financial Regulatory Authority (NFRA) has initiated disciplinary action against Deloitte Haskins & Sells (DHS) for alleged lapses in its audits of IL&FS Financial Services (IFIN). "The first step would be to issue a show-cause notice to the audit company, before any action is taken ... It is in the works," a senior government official told Business Standard. The regulatory body had said in an audit quality review report that quality control systems and processes at DHS were "severely inadequate and ineffective".
Edelweiss-backed Sekura Roads has been declared highest bidder for two IL&FS road projects for a combined bid value of 1 ,428 crore which would entail a haircut of 22 % to the lenders. Both the projects, Jharkhand Infrastructure Implementation Company (for bid value of Rs 512 crore) and Jorabat Shillong Expressway (for bid value of Rs 916 crore), have a total debt of Rs 1 ,834 crore. Italy headquartered Autostrade has also won the bid for the Pune Sholapur Road at a bid value of Rs 1,404 crore, a haircut of 27% to the lenders. The project has total debt of Rs 1,925 crore. The committee of creditors will vote on these HI bids in the coming week.
Resolution for IL&FS's five road assets hangs in the balance as bid validity for these projects is set to expire by month-end. In a last-ditch effort to finalise the sale of these assets, the group will now seek lenders' approval through e-voting.