Indage lives to fight another day

The Bombay High Court has given Indage Vintners some breathing space. The winemaker has obtained a stay on its liquidation till 17th June

The Bombay High Court has extended the stay order on Indage Vintners’ liquidation till 17th June, giving the winemaker more time to sort out its finances. The company plans to hold meetings with secured and unsecured lenders over the next few days.

According to Ranjit Chougule, Indage Vintners managing director, the corporate debt restructuring (CDR) package of the company has been approved. The secured and unsecured lenders have consented to Indage Vintners’ CDR package.

“All lenders are already addressed in the business plan by (the) CDR. A small amount of lenders, non-licensed lenders and trade creditors are keen to put pressure on the business for earlier repayment which we will address in our upcoming scheme of arrangement under Sections (391) and (394) of the Companies Act, to be presented to the court in June,” Mr Chougule told Moneylife.

There have been media reports that state that Indage Vintners is likely to sell its personal property to bring in capital. However, Mr Chougule has said that the company has no plans of selling its property.

The total debt obligations have been deferred by approximately two years. The promoters of Indage Vintners are to bring in Rs75 crore to Rs100 crore as capital. The total debt of Indage Vintners stands at Rs400 crore under the corporate debt restructuring scheme. This was led by ICICI Bank while the other lenders were IndusInd Bank, Allahabad Bank, UCO Bank, IDBI Bank and Bank of Rajasthan.

The efforts that the company put in to fund its acquisitions in Australia and South Africa, might have been a gamble the company shouldn’t have taken. When the global financial crisis occurred, Indage relinquished any chances of the company walking tall again. The international market did not perform to expectations and its plans to sell exotic Indian wines in overseas markets did not materialise. Domestic demand for international wine also fell far short of the hype created by the industry itself.

On 19th March, when the Bombay High Court had passed the order for Indage to wind up operations, many players in the industry were disappointed with the decision. Bearing in mind that it was the perseverance of Shyamrao Chougule, its founder, who brought international quality wine and champagne to India in the 1980s, the nascent wine industry in the country was saddened by the decision.


SEBI seeks to regulate fund investment in & disclosure of derivatives

SEBI has sought clarity and limits on MF exposure to derivatives and has outlined a uniform detailed format for computing derivatives in their half-yearly portfolios

Market watchdog Securities and Exchange Board of India (SEBI) has sought views from mutual funds on the proposed circular which tweaks certain clauses of its earlier orders in order to bring more transparency and clarity in disclosure of MFs’ investment in derivatives in their portfolio statements. The draft circular was sent to all the chief general managers and investment managers of fund houses on 25 March 2010. Moneylife possesses a copy of the draft circular sent to all asset management companies (AMCs). If approved by fund houses, the earlier format prescribed by SEBI in its circular dated 24 November 2000 will be discussed, and modified to include the new format.

The latest circular limits the gross cumulative exposure of MFs through debt, equity and derivatives positions to 100% and option premium paid to 20% of the net assets of the scheme. It cannot exceed the prescribed limits.

Exposure in derivatives due to hedging may not be included in the above prescribed limit, only if such exposure reduces losses. Cash or cash equivalents with residual maturity of less than 91 days will not be included in this limit. Further hedging cannot be done for existing derivatives positions; if done, then it will be included in the above mentioned limit. The derivatives instrument used to hedge has to have the same underlying security as the existing position being hedged. The quantity of underlying security associated with the derivatives position taken for hedging purposes should not exceed the quantity of the existing position against which hedge has been taken. Exposure due to derivative positions taken for hedging in excess of the underlying position against which the hedging position has been taken will also be included in the 100% gross exposure limit.

MFs can enter into plain vanilla interest rate swaps for hedging and the value of the notional principal must not exceed the value of respective existing assets being hedged by the scheme.

The circular also outlines certain modifications pertaining to derivatives position computing. Currently the manner of half-yearly portfolio derivatives disclosure is not uniform across the industry as the SEBI (MF) Regulations, 1996, do not specifically prescribe a format for such disclosures.

SEBI has also asked MFs to separately disclose the hedging positions through swaps as two notional positions in the underlying security with relevant maturities.

“For example, an interest rate swap under which a mutual fund is receiving floating rate interest and paying fixed rate will be treated as a long position in a floating rate instrument of maturity equivalent to the period until the next interest fixing and a short position in a fixed rate instrument of maturity equivalent to the residual life of the swap,” states the draft circular. MFs will also not write options or purchase instruments with embedded written options. Further, while listing net assets, the margin amounts paid should be reported separately under cash or bank balances.

Following the recommendations of the Secondary Market Advisory Committee, SEBI’s circular dated 14 September 2005 permitted MFs to participate in the derivatives market at par with foreign institutional investors (FIIs) in respect to position limits in index futures, index options, stock options and stock futures contracts. The SEBI circular dated 19 September 2002 included disclosures related to equity and debt schemes. 


FM gives debt relief to coffee growers, tax relief to others

Sops might cost the government Rs400 crore in revenues; no rollback declared on fuel prices

The government announced a slew of concessions worth up to Rs400 crore for coffee growers, local tobacco industry, hospitals, cancer drugs and urban housing for the poor, among others, as part of the Finance Bill that was passed today, reports PTI.

Replying to a debate on the Finance Bill, 2010-11, finance minister Pranab Mukherjee said he had decided to lower excise duty on hand-made cheroots priced up to Rs3 per stick to 10% following demands from members and the industry.

He also announced a Rs-241 crore relief package for coffee growers by way of waiving three-fourth of loans taken prior to 2002, especially by small farmers, while restructuring repayments for the rest.

Mr Mukherjee, however, did not roll back the hike in excise and customs duty on petrol and diesel, saying that the government has to look at ways of meeting the Rs85,000 crore revenue loss on fuel sale expected this fiscal.

The measures announced will have a revenue implication of Rs300-Rs400 crore, revenue secretary Sunil Mitra said.

The opposition NDA and the Left parties staged a walkout in protest against the government’s decision not to roll back the Rs2.71 a litre increase in petrol and Rs2.55 per litre hike in diesel rates.

With a view to giving impetus to healthcare, the minister announced tax breaks for construction of hospitals with at least 100 beds anywhere in the country.

On construction of real-estate complexes, which has been brought into the ambit of service tax in this year's Budget, Mukherjee increased the tax concession by offering more abatement.

Abatement (tax rebate) has been increased to 75% from 67% of the gross value of property that includes land value.


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