Companies & Sectors
StanChart India gets CCI approval for buying Barclays' assets

Standard Chartered Bank had approached the Competition Commission regarding its proposed acquisition of certain loan portfolios of Barclays in India

 
New Delhi: Fair trade regulator Competition Commission of India (CCI) has approved Standard Chartered Bank's proposed buyout of certain loan assets of Barclays, saying the deal would not adversely impact competition, reports PTI.
 
Standard Chartered Bank, India had approached the Competition Commission regarding its proposed acquisition of certain loan portfolios of Barclays.
 
The entity is to buyout the "performing loan portfolios of personal instalment loans, loans against property and home loan finance of Barclays Bank Plc, India branch and the performing loan portfolios of personal instalment loans and loans against property of Barclays Investments and Loans (India) Ltd (BILIL)".
 
Approving the proposal, the Commission in its order dated 21st November, said it is of the opinion that "the proposed combination is not likely to have an appreciable adverse effect on competition in India".
 
Besides, Standard Chartered Bank, Barclays India and BILIL, there are a large number of other players engaged in the business of providing personal loans, inlcuding personal instalment loans, loan against property and home loan finance, the Commission said.
 
"In view of the foregoing, it is observed that the proposed combination is not likely to raise any adverse competition concern," it said.
 
For the deal, Standard Chartered Bank has entered into separate framework deeds with Barclays India and BILIL.
 
The notice, seeking approval, was submitted to the Commission on 5th November.
 
As per the notice, Barclays India is exiting the line of business pertaining to personal instalment loans, loans against property and home loan finance while BILIL is existing operations related to personal instalment loans and loans against property.
 

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12.6% of total bank debt is with top 10 Indian corporate groups

Unless a solution to the problems of the heavily leveraged sectors and corporates is found, it is very unlikely that the economy will move ahead, says Espirito Santo Securities

 
Over the last five years (FY07-FY12) the debt of the top 10 debt-laden Indian conglomerates has increased at a CAGR (compounded annual growth rate) of more than 40%. This led to significant concentration of the banking system debt with the top 10 Indian groups accounting for nearly 12.6% of the total banking system debt.
 
Figure 1                       Debt as a % of total banking system advances
Figure 1 shows the group debt as a percentage of the total banking system advances of the top 10 corporate groups. This analysis is based on a report by Espirito Santo Securities. The Anil Ambani group (ADAG), Essar and Vedanta groups account for the top 6.4% of the total banking system advances. This is followed by Adani and Jaiprakash groups.
 
Of the groups deeply in debt, most, if not all have large interests in the infrastructure space with some of them being pure play infrastructure companies such as ADAG, Adani, GMR, Lanco and GVK. Others such as Vedanta and JSW invest mainly in metals and mining along with having interests in power generation.
 
It does not come as a surprise that it is these specific sectors, infrastructure, in particular, which are facing problems. According to Espirito Santo, understanding the fate of these large corporates and the sector specific issues can give us a glimpse of the asset quality problems.
 
Espirito Santo adds “Unless a solution to the problems of these heavily leveraged sectors and corporates is found, it is very unlikely that the economy will move ahead.”
 
As can be seen in the above graphs, the balance sheets and P&Ls for these groups are significantly stretched, as is clearly visible from the low interest coverage ratio which is hovering precariously close to the 1x, and the high leverage of the balance sheet at more than three for nearly six of the top 10 groups. 
 

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SAT dismisses Sahara group appeal against SEBI

The Securities Appellate Tribunal while dismissing the appeal filed by Sahara India Real Estate Corp and Sahara Housing Investment Corp, said that any further direction in the case can be sought for and granted by the Supreme Court alone

 
Mumbai: The Securities Appellate Tribunal (SAT) on Thursday dismissed an appeal by two Sahara group companies against market regulator Securities and Exchange Board of India (SEBI) in the high-profile case involving refund of about Rs24,000 crore with interest to about three crore investors, reports PTI.
 
The two Sahara group companies, in their appeal had sought the Tribunal's intervention in refund of investors' money and had accused the market regulator SEBI of wrongly charging them of non- compliance with a Supreme Court order in this regard.
 
The tribunal, however, said that any further direction in the case can be sought for and granted by the Supreme Court alone and dismissed the appeal.
 
"We, therefore, find the appeal premature as well as non-maintainable. Dismissed," the SAT said in its order passed today.
 
Passing the order on the appeal filed on 27th November, SAT observed that "a contempt petition filed by the respondent Board (SEBI) and a review petition filed by the appellants (Sahara group companies) against the order dated 31 August 2012 are already pending before Supreme Court."
 
The apex court had asked Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHICL) to refund an estimated Rs24,000 crore with an annual interest of 15%, while SEBI was directed to facilitate the refund of this money to about three crore bondholders of the two firms.
 
The Supreme Court had asked these companies to furnish the documents related to these investors to SEBI within 10 days and refund the money within three months, failing which the regulator was asked to freeze the accounts and attach properties of the two companies.
 

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