The week of Insolvency and Acquisitions
In this news article we will be talking
about Anil Ambani’s resignation from RCom after its bankruptcy and heavy losses
and Jaypee infratech’s insolvency after
non-payment of IDBI bank’s 526 crore loan.
BY SAHIL DESAI 3 Mins Read
Anil Ambani Quits as RCom Director
Reliance Communications was an Indian mobile network provider
that offered voice and 2G and 3G data services. In May 2018, the company filed
for bankruptcy as it was unable to sell assets to repay its debt. The firm has
recently posted a mega loss of Rs. 30142 crore, registering India’s second
biggest quarterly loss after Vodafone Idea.
The firm was mainly hit by Supreme Court ruling on the AGR ie
the adjusted gross revenue issue. The company had provided for liabilities on
account of this to the tune of Rs 28314 crore (Rs 23327 crore license fee and
Rs 4987 crore spectrum usage charge). The huge loss assume significance, as the
firm had made a profit of Rs 1141 crore in the corresponding period a year ago.
Thus, a
day after dismal Q2 numbers Anil Ambani, along with 4 other directors submitted
their resignation from Reliance Communications. Since the company is under the
governance of the resolution professional the resignation has been put up to
the committee of creditors of the company for their consideration.
Reliance Communications was founded on 31 July 2002 as
Reliance Infocomm Limited with the introduction of its nationwide CDMA2000 service. As noted in May 2017, RCom was India’s sixth largest telecom operator.
However, it fell behind mainly due to its dependence on CDMA technology and the
tariff wars that started after several players entered the market in 2008. The
company’s debt rose to over Rs 47000 crore at one time, amid falling revenue
and profits.
In 2016,
the launch of Jio unleashed another price war in the sector. RCom’s efforts to
gain scale through a merger with Aircel failed due to legal challenges. After
some unsuccessful efforts to sell assets, it filled for insolvency in May.
Jaypee Infratech Insolvency
This is why NBCC and Suraksha Realty have been showing
interest to acquire bankruptcy bound Jaypee Infratech. They have been asked to
submit their offer as per the direction of the Supreme Court.
State owned NBCC Ltd is showing interest by taking responsibility
of selling Rs 1750 crore worth of unsold flats and begin work on the latter’s
incomplete projects. NBCC is also offering lenders 1426 acres of land worth Rs
5000 crore and providing half of 3000 benami flats to them.
Suraksha Realty has also submitted its bid. They are offering
7900 crore to lenders and possession in 3 years to over 22000 homebuyers.
To take forward the process of insolvency resolution a
meeting of Committee of Creditors will take place after the Supreme Court
directed early this month to complete the process within 90 days.
UP-FRONT CASH
|
POSSESSION
|
LAND
|
|
Suraksha Realty
|
Rs 125 crore
|
Up to 3 years
|
2000 acres to retire 7800cr loans
|
NBCC
|
Rs 120 crore
|
1-3.5 years
|
Over 1400 acres
|
This will
be the third round of bidding process in the Jaypee Infratech insolvency matter
as the first and second round failed to make any deal. In the first round of
insolvency proceedings, the Rs 7,350 crore bid of Lakshadeep, part of Suraksha
Group, was rejected by lenders. In the second
round, lenders first rejected bid of Suraksha Realty and then that of
state-owned NBCC.
About 32000 home buyers have been left in the lurch after
Jaypee Infratech was declared insolvent in August 2017 and they will sigh of
relief once the insolvency process gets completed.