Big ticket strategic sale of BPCL, CONCOR, SCI, among others
Pushing the pedal on its disinvestment programme, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved strategic disinvestment in five large public sector undertakings (PSU) -- BPCL, CONCOR, SCI, THDC and NEEPCO -- along with change in management control in these companies.
 
Addressing the media after the Cabinet meeting, Finance Minister Nirmala Sitharaman said that while the Centre will strategically disinvest Bharat Petroleum Corporation Ltd (BPCL), Shipping Corporation of India (SCI) and Container Corporation of India (CONCOR), it will sell its entire stake in THDC India Ltd and North Eastern Electric Power Corporation (NEEPCO) to another state-run power major, NTPC. 
 
The government will also give up management control in these companies, Sitharaman added.
 
The strategic sale of BPCL, however, would exclude the oil refiner's 61 per cent stake in Numaligarh Refinery Ltd in Assam, Sitharaman told reports.
 
"Numaligarh will be carved out from BPCL before its disinvestment and would retain its PSU character. The company can be taken over by other CPSE in the oil and gas sector under consolidation," she said.
 
The Cabinet decided on the "strategic disinvestment of BPCL's shareholding of 61.65 per cent in NRL along with transfer of management control to a Central Public Sector Enterprise (CPSE) operating in the oil and gas sector," an official statement said.
 
Disinvestment Secretary T.K. Pandey told the media that the disinvestment of BPCL may be be carried out in two phases.
 
The government may consider two-phased disinvestment for public sector oil refiner and retailer BPCL if the initial strategic sale of the entire 53.29 per cent government stake in the company fails to get requisite response.
 
IANS had earlier reported that due to concerns over lack of interest among market players, including global majors, investors may not commit to pump in close to Rs 1 lakh crore required to complete the transaction at one go.
 
The government has tried this model earlier during the strategic disinvestment of metal and mining PSUs -- Hindustan Zinc Ltd and BALCO. Then Atal Bihari Vajpayee government had retained minority shareholding in these PSUs after the sale and change of management control.
 
At current share prices, government's 53.29 per cent stake in BPCL is worth around Rs 60,000 crore. This is likely to help the government meet its higher disinvestment target of Rs 1,05,000 crore for the financial year 2019-2020.
 
In terms of CONCOR, the government would disinvest 30.8 per cent, out of the 54.8 per cent equity the government currently holds, and will retain the remaining 24 per cent. The management control in CONCOR will still change hands, Pandey said.
 
Two PSUs under the strategic disinvestment plan, THDC and NEEPCO, will be taken over by another state-run power major NTPC.
 
Official sources said NTPC may offer close to Rs 10,000 crore for picking up the entire stake held by the Centre in the two companies. Though the transaction advisor will come to valuations about the entities later, the portfolio of projects with NEEPCO and THDC make it a fit case to command good value.
 
The Centre holds 100 per cent stake in NEEPCO that operates close to 1,500 MW of power plants in the northeastern region, while it has 75 per cent holding in THDC. The Uttar Pradesh government holds the balance 25 per cent stake in THDC India.
 
In another decision, the Finance Minister said the government would lower stake below 51 per cent in select PSUs while retaining the management control. The decision to bring down Centre's stake will be taken on a case-to-case basis, she said. 
 
The Disinvestment Secretary said that even with government holding falling below 51 per cent, these companies would continue to retain the PSU character and the move will not require any amendments to laws governing the PSUs.
 
From the stake sale in SCI and CONCOR, the government is likely to get over Rs 2,000 crore and Rs 10,500 crore, respectively, at current stock prices of the company.
 
Among other decisions, the CCEA approved certain measures for the effective implementation of initiatives to revive the construction sector. 
 
It also cleared the amendments proposed in the Toll-Operate-Transfer (TOT) model by National Highways Authority of India (NHAI). Public funded National Highway (NH) projects, which are operational and have toll revenue generation history of one year after the Commercial Operations Date (COD), shall be monetised through the TOT Model.
 
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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    Cabinet gives Rs 42,000 cr cash flow to telcos in two-year moratorium
    In a big relief to the telcos --Airtel, Vodafone and Jio, the Union Cabinet has approved the recommendation of the Committee of Secretaries (CoS) and allowed telcos a two-year moratorium on spectrum-related dues which translates into a Rs 42,000 crore financial support to the stressed sector.
     
    Deferment of spectrum auction installments would ease the cash outflow of the stressed telcos and facilitate payment of statutory liabilities and interest on bank loans. 
     
    The move to defer payments for 2020-21 and 2021-22 will give Rs 42,000 crore relief to Bharti Airtel, Vodafone Idea and Reliance Jio, highly placed sources said. 
     
    Cabinet announcements did not put any figure on the benefits in numbers ."In view of the current financial stress faced by major telecom service providers and in pursuant of the recommendations by Committee of Secretaries, it is decided to defer receipts of spectrum auction installments due from the telecom service providers from the years 2020-21 and 2021-2022," Finance Minister Nirmala Sitharaman said on Wednesday.
     
    The deferred amounts, she said would be equally spread over the remaining installments.
     
    "These deferred amounts bill be spread equally in the remaining installments to be paid by telecom companies. Interest, as stipulated while auctioning the concerned spectrum, will, however, be charged so that NPV is protected, she noted.
     
    However, telecom companies opting for a two-year deferred payment would have to furnish a bank guarantee.Industry body COAI welcomed MoF's announcement on Telecom Sector but said high level of levies and taxes continues to be a challenge for the sector.
     
    "We welcome the fact that the government recognises the financial distress of the telecom sector and has provided relief in the form of deferments of spectrum payments. We are very thankful to our Minister Prasad and the DoT for supporting us and pushing forward our request to the FM for action. This will certainly provide some immediate cash flow relief to the industry.
     
    "However, the high level of levies and taxes continues to be a challenge for the sector. The telcos pay up to 30% of their revenues to the government, by way of various levies and Taxes, which is an enormous burden on the industry. 30% of what is collected is passed on to the Government. We have been requesting the Government that these levies and Taxes be rationalised and the same is also one of the important goals of NDCP. 
     
    "However, these aspects of the NDCP are yet to be operationalised and we are engaging with the government on the same. We humbly request the government to consider the vexing issue of AGR and address the anomaly of continuing with the previous legacy issue of revenue share and License Fees and SUC when spectrum has already been paid for up front. We hope the government will consider this request of either eliminating AGR or redefining these in line with our request and then reduce the LF and SUC to 3% and 1% respectively", Rajan S Mathews, DG, COAI said.
     
    Continued operation by telecom service providers, according to the statement, would give a fillip to employment and economic growth. In addition, the improved financial health of service operators would facilitate the maintenance of quality of services to the consumer.
     
    Following the Rs 1 lakh crore worth of Q2 loss by telcos, the Centre had formed a Committee of Secretaries to look into relief package to the ailing sector.The recent adverse Supreme Court ruling asking the telecom companies to pay up outstanding to the Department of Telecommunications (DoT) within three months, coupled with the existing cumulative debt of Rs 7.5 lakh crore, has made the incumbents heavily leveraged. 
     
    Indian telecom operators owe the government nearly Rs 1.47 lakh crore in license fee (LF) and spectrum usage charges (SUC), the communications ministry told Parliament Wednesday. Of the total amount, license fee comes to Rs 92,642 crore as of July this year, while SUC comes to Rs 55,054 crore as of October end this year.
     
    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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    RBI Finally Dismisses DHFL Board, to Initiate Insolvency Proceedings
    The Reserve Bank of India (RBI) has decided to supersede the board of directors of Dewan Housing Finance Corp Ltd (DHFL) due to governance concerns and defaults by DHFL.
     
    "The Reserve Bank also intends to shortly initiate the process of resolution of the company under the Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019 and would also apply to the National Company Law Tribunal (NCLT) for appointing the administrator as the insolvency resolution professional," the central bank says in a release.
     
    RBI also appointed R Subramaniakumar, former managing director (MD) and chief executive (CEO) of Indian Overseas Bank as administrator on DHFL.
     
    DHFL has been tottering and has faced allegations of large-scale loot for over 10 months now. In December 2018, Moneylife wrote about how loans to promoters and poor disclosure were used to boost net worth and valuation. 
     
    Last month, the Registrar of Companies' (RoC) regional office in Mumbai had recommended action by the Serious Fraud Investigation Office (SFIO) against DHFL in its report to the ministry of corporate affairs (MCA).
     
    DHFL, a non-banking finance company (NBFC), had earlier said it was working on a debt resolution plan with lenders to protect the interests of its stakeholders.
     
    As of 6 July 2019, DHFL had a total debt of about Rs1 lakh crore, in which banks have an exposure of Rs38,342 crore.
     
    In August, the DHFL board approved a proposal to convert its debt into equity, which will give banks control of the mortgage lender that has been struggling to meet its payment obligations.
     
    DHFL, which is the country's third largest mortgage lender, had sought a Rs15,000-crore fund support from creditors to start giving loans to viable projects while their lenders finalise the resolution plan. The plan could also include picking up 51% equity in the company by converting their debt into equity.
     
    Audit firm KPMG, which has carried out a forensic audit of DHFL, has submitted a draft report to the lenders. Initiated by the lenders, the findings of the forensic audit can affect a proposed debt-restructuring plan aimed at reviving DHFL. It may also prompt these lenders to push for a management change in the Wadhawan family-run company.
     
    The Wadhwan family separated in 2008 and, after a formal separation agreement in 2010, DHFL was with one part of the family and HDIL with another. Both sides stand accused of large-scale misuse of funds. This raises serious questions about the role, responsibility, due-diligence and accountability of lenders, who are now running helter-skelter to salvage what they can of their massive loans, while retail investors and depositors are left to fend for themselves.
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    COMMENTS

    Ramesh Poapt

    10 months ago

    what are the chances of debenture holders' money coming back, time involved
    haircut, if any. your (ML) comments of that please.

    Kochar Bipin

    10 months ago

    Kudos to RBI. DHFL has been wilfully defaulting only on secured debentures who have first charge on all its assets while servicing unsecured bank loans and fixed deposits. RBI administrator should now immediately work with debentures trustee to ensure that all dues of debenture holders are paid within two weeks.

    S Balakrishnan

    10 months ago

    Along with ilfs the biggest fin fraud in current times

    Nakul Kumar Reddy

    10 months ago

    Verdict came ,rbi dismissed

    Aditya Singh

    10 months ago

    Nice

    Hudaf Shaikh

    10 months ago

    Huge sums of money were siphoned off in the past 1 year under guise of paying off unsecured commercial papers - further, a lot of the assets too were siphoned off under guise of asset sales and securitization.

    Under NCLT, it is clear that these bogus sales of assets and securitizations will be disallowed - thus will benefit all secured creditors.

    REPLY

    Sumer Chandra Jain

    In Reply to Hudaf Shaikh 10 months ago

    Always late to act.How much already siphoned and how much remaining for ordinary depositors is to be seen.

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