As all revival options fail, NCLT orders liquidation of Reid & Taylor
The National Company Law Tribunal (NCLT) Mumbai on Tuesday ordered the liquidation of the debt-hit fashion textile major Reid & Taylor after all attempts to revive it failed.
 
The NCLT Mumbai bench comprising B.M. Mohan and V. Nallasenapathy ruled that the investors have failed to satisfy their networth before the NCLT and hence there are no options left but to order the liquidation of the company, preferably as a going concern.
 
The ruling came after several investors proposed by the Employees Association and other bidders in the past few months failed to satisfy the basic criteria to take over the sick company, burdened by a default of Rs 4,100 crore.
 
"We call upon the registrar and Resolution Professional (RP) to put in their best efforts to ensure that the company is sold as a going concern," the NCLT Mumbai Bench said in their oral order this evening.
 
The bench ruled that it had honest intentions to prevent the company from going into liquidation, protect employees and save the creditors, including public sectors, who had invested public money to get maximum returns.
 
"We are passing the order (of liquidation) because all our efforts to offer opportunity to the investors to revive the company have gone in vain. We are saddened the manner in which investors have misrepresented facts before us. We are, therefore, constrained to give further opportunity to investors to take over R&T," ruled the NCLT members.
 
The judges also rebuked a representative of Indian Gas Ltd. New Delhi, the final investor, which staked a claim to take over the company, but later failed to prove the IGL's networth.
 
Last week, the NCLT Mumbai bench had directed the IGL to appear before the NCLAT, New Delhi in a case filed by Finquest Financial Solutions LTd. (FFSL), the majority stakeholder in R&T.
 
However, the IGL failed to appear and formally prove its credentials before the NCLAT, which ordered the NCLT Mumbai to dispose of the matter within two weeks and placed the matter for final hearing on February 27 (in New Delhi).
 
"We will not hear you today. Who are you? You are only an employee and we have given you an opportunity to prove your company's networth, but you failed," the NCLT Mumbai bench said sharply today.
 
The NCLT also rejected Scorpio Vintrade to invest jointly with IGL as it was not a group company of the latter today.
 
Earlier, other investors SPGP Group of Hong Kong, CFM Asset Reconstruction Pvt. Ltd, had staked their claims but later withdrew from the fray.
 
Edelweiss ARC, one of the financial creditors had initiated the NCLT proceedings under Corporate Insolvency Resolution Process, to recover the monies defaulted by R&T.
 
Officials in the FFSL said the fate of around 1,100 employees of the Mysore-based company would be clear now that the NCLT Mumbai's final verdict has been delivered.
 
Promoted by S. Kumars-fame textile tycoon, Nitin S. Kasliwal, Reid & Taylor once boasted of top-notch brand ambassadors such as Hollywood's Pierce Brosnan and Bollywood's Amitabh Bachchan.
 
Since 1999, the company operates a modern plant and machinery in Mysore from where it produced its famous men's apparels ranging from formal to casuals, but after the financial crisis hit a few years ago, it continued with truncated operations.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    Developers need to increase sales by 2.5 times to service debt: Liases Foras
    Total income of top-90 developers, including their rental income from different properties is Rs23,564 crore but they need to repay a debt of is Rs45,128 crore. Due to the gross mismatch it seems current debt levels are not serviceable and developers will have to double their sales, says a research note from Liases Foras.
     
     
    The independent real estate research institute says, "...the situation of developers is akin to an elephant in a well which is unable to come out on its own. Somebody needs to replenish the well. But can we find cheap capital to refill the well? The existing scenario signifies that the industry is at an inflection point and is staring at long-due price correction in order to improve sales. But is there a scope to bring down prices? In the current scenario price correction does not seem plausible. In order to stay afloat at such low profit margins, one or more stakeholders in the industry would have to step in and take a haircut. Who would it be?"
     
     
     
    According to Liases Foras, the defaults of Infrastructure Leasing and Financial Services (IL&FS) and ongoing speculations about Dewan Housing Finance Corporation Ltd (DHFL) have made industry stakeholders anxious yet again.
     
    "Moved by the sudden upheaval we have tried to gauge impact of liquidity squeeze on the sector and developers. In the past 10 years while value of sold stock has increased by 1.56 times, the value of unsold stock has become 4.72 times. In terms of units, volumes of sales have gone up by 1.28 times while inventory increased to 3.33 times between 2009 and 2018. In the same period lending to the real estate sector has gone up from Rs1.2 trillion to Rs4 trillion," it says.
     
     
     
    Liases Foras feels that existing scenario has exposed the inefficiency within the sector. "While debt has grown in a monumental manner and so has inventory, sales did not go up in the same proportion," it says, adding, "Having borrowed money from different sources, developers kept adding housing stock into the market without any productivity. Since sales remained abysmal all this while, developers are finding it difficult to meet their debt obligation at this point."
     
    Analysis done by the real estate data analytics company, shows that residential market generated Rs2,40,000 crore as yearly revenue in 2018. Top-8 cities, including Mumbai Metropolitan Region (MMR), National Capital Region (NCR), Bengaluru, Pune, Hyderabad, Ahmedabad, Chennai and Kolkata cornered more than 80% of the entire business. The top-8 cities generated Rs2,15,000 crore as revenue out of the total Rs2,40,000 crore.
     
    Liases Foras also examined performance of close to 11,000 developers for a holistic view. It also noticed that out of the total kitty of Rs2,40,000 crore of business, top-90 developers in the country accounted for about third of business and generated Rs78,879 crore. 
     
     
     
    The firm studied exposure to both top-90 listed and unlisted developers. It took data for listed companies from public reports and sources, while for unlisted ones it relied upon the charge filings that the company submitted to ministry of corporate affairs (MCA).
     
    The analysis shows total disposable income of all developers, including their rental income from different properties, is expected to be Rs57,000 crore but repayment required on their part is Rs1,28,772 crore. "In order to fulfil obligations, all developers will need to increase  earnings before interests and taxes (EBDIT) by 2.26 times. Additionally to make profit of 15% the developers will need to increase the EBDIT to 2.60 times, or need to increase sales by 2.6 times," Liases Foras says.
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    Walmart may exit Flipkart due to new FDI rules: Morgan Stanley
    Retail giant Walmart may exit Flipkart after India's new Foreign Direct Investment (FDI) norms for e-commerce companies came into force, US investment banker Morgan Stanley has warned.
     
    "An exit is likely, not completely out of the question, with the Indian e-commerce market becoming more complicated," the report by Morgan Stanley said late Monday. 
     
    According to the report, Walmart-Flikkart saga might turn out to similar to what happened with Amazon in China in late 2017.
     
    "There is a precedent for an exit as Amazon retreated from China in late 2017 after seeing that the model no longer worked for them," the report read. 
     
    "We estimate that Flipkart derives 50% of its revenue from this category, meaning Flipkart could face meaningful disruption and top-line pressure in the near term," it added.
     
    The new FDI rules may require Flipkart to remove as much as 25% products from its platform including smartphones and electronics that constitute a bulk of sales, said Morgan Stanley.
     
    On February 1, disruption was caused in the e-commerce operations in India of the two companies after the new FDI norms for the e-commerce sector came into effect. 
     
    The norm prohibited the online retailers from mandating any company to sell their products exclusively on its platform. 
     
    In the new policy, the Commerce Ministry also noted that the online retail firms would not directly or indirectly influence sale price of goods and services and would maintain a level playing field.
     
    Amazon India had to withdraw many of its products and they were listed as "currently unavailable" as the new norms prohibit the e-retailers from selling products of companies in which they have stakes.
     
    The two companies have together lost market capitalisation of $50 billion. 
     
    Amazon lost market capitalisation of over $45 billion on Nasdaq while Walmart lost over $5 billion on the NYSE.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

     

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    COMMENTS

    Liju Philip

    6 months ago

    The government ensuring that the platform is skewed in favour of their funders entering the ecommerce market. Same happened when the fraud baba wanted to make noodles.

    AAR

    6 months ago

    Its a loss for Indian consumers. Amazon, Walmart, eBay provide low price products to consumers in USA. Indians cannot take advantage of it. Even in USA, only 7% of transactions is online rest happens through BM. Just for helping fat, lazy and greedy shopkeepers, Indian govt has come up with dinosaur laws.

    Charat Sharma

    7 months ago

    Shun US retailers and their investment advisors, kudos to indian goverment for taking this bold step and protecting small traders

    Shankhadeep Nath

    7 months ago

    Love the choice of words by Morgan Stanley. A US based investment banking company \'warning\' Indian Government! Just pantomime and nothing else. They can simply cross list products. Or use a dummy third party eCommerce portal to sell their products.

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