IL&FS toxic bond pandemic now hits Gujarat blue chips
The L&FS (Infrastructure Leasing and Financial Services) toxic bonds contagion has grown into a pandemic and now has hit Gujarat, the prime minister's (PM's)  own turf which he nurtured so well for over a decade.
 
Information with IANS suggests that several top state-owned PSUs have been hit by the toxicity of IL&FS bonds. Unfortunately, the employee provident fund trusts of several such companies are largely invested in these bonds.
 
Gujarat Cooperative Milk Marketing Federation (GCMMF), or Amul as we know it, is one such major state-owned company infected by the virus. The Verghese Kurien brainchild with a turnover of $4.8 billion and a daily milk procurement of about 23 million litres from 18,700 villages has its staff provident fund trust invested in these bonds.
 
And that is where it doesn't end—the iconic Rs 6,309-crore revenue Gujarat State Fertiliser Chemicals has a similar story. Its EPF Trust appears to be compromised and contaminated. The extent of the malaise is, however, at this point not known, but that they have invested in what were once triple A-rated bonds is without doubt. 
 
Unlike GCMMF, which is essentially a cooperative, GSFC is a publicly listed company with a market cap of Rs 4,120 crore as of Monday closing. It manufactures fertiliser and industrial chemicals. Here again, it is not known how many of its workforce have their EPF Trust exposure to toxic bonds.
 
Two other companies from Gujarat which are facing the same problem—Gujarat Narmada Valley Fertilisers and Chemicals Ltd, where the EPF Trust has exposure to the bonds, and Gujarat Industries Power Co Ltd where the PF Trust has exposure.
 
Gujarat Industries Power Co was incorporated in 1985 as a public limited company under the auspices of the government of Gujarat. The company is engaged in the business of gas-based electrical power generation and has a total present installed capacity of 1,009MW. 
 
GNFC is like GSFC a fertiliser and industrial chemicals company specialising in urea, calcium ammonium nitrate, ammonium sulphate et al. This company founded in 1981 is also listed on the BSE as a joint sector company. GNFC closed at Rs 326 on Monday with a market cap of Rs5,083 crore.
 
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

    Ramesh Poapt

    1 year ago

    OMG! there may be few others as well.

    GIFT City Group CEO Ajay Pandey Quits After IL&FS Says It Can’t Pay Him: Report
    Ajay Pandey, managing director and group chief executive (CEO) of Gujarat International Finance Tec-City Co Ltd (GIFT City) had left the group, following a decision by Infrastructure Leasing and Financial Services Ltd (IL&FS) to discontinue his services, says a report. 
     
    Quoting sources from the Gujarat government, a report from the Indian Express says, IL&FS could no longer afford paying salary to Mr Pandey. 
     
    JN Singh, chief secretary of Gujarat told the newspaper that “IL&FS has informed that they were not in a position to continue paying the salary of Ajay Pandey and so his term was not renewed. Salaries in the private sector are very high and IL&FS is not in a position to continue with (Mr) Pandey’s salary. He was a nominee from IL&FS, while the chairman is a state government nominee.”
     
    After the exit of Mr Pandey, there are 10 members on the board of directors of GIFT City. This includes two nominees of IL&FS, four nominees of the Gujarat government and four additional independent directors. 
     
    Last year on 8th August, Moneylife wrote about an unprecedented case where DC Anjaria, an independent director and audit committee head of GIFT City had filed a public interest litigation (PIL) alleging that the showpiece Rs70,000-crore project had virtually been gifted away. (Read: Is GIFT City Gujarat’s Gift to IL&FS through One-sided Deals?)
     
    Moneylife had asked GIFT City as well as Hari Shankaran, the then vice-chairman of IL&FS for comments before we published our report of 8 August 2018. We received no response. 
     
    Instead, on 13 August 2018, Mr Pandey, the then MD and CEO of GIFT City, chose to respond through an advertorial by a third party (Skoch Development Foundation), published in Business Standard. The advertorial about Gift City included a half-page interview of Mr Pandey, which makes no reference to Moneylife while countering the charges made by Mr Anjaria in the report.
     
     
    The advertisement, in the form of an interview, had a screaming headline: “Allegations are false, malicious, factually incorrect and misleading”. Since an advertisement apparently does not have to follow editorial norms, it does not say who made the allegations or where they were published. 
     
    Mr Pandey ends up proving Mr Anjaria’s allegations—of the lack of competence of Fairwood Holdings to handle the project—by admitting that the contract was terminated within two years of its appointment—putting paid to the claims that it was selected after great deliberation.  (Read: GIFT City-IL&FS Issue Gets Murkier with Ajay Pandey’s Interview)
     
    IL&FS had invested in the project in 2007 when the company parked Rs32.5 crore for 50% stake. Gujarat government had parked a similar amount in the project and owns the remaining stake in GIFT City.
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    COMMENTS

    Amitabha Bhattacharjee

    1 year ago

    GUJARAT ME SAB CHOR HAI, KITNA NAM GUNAEGA ----------------------

    Jet Airways: Lenders Invite Bids for Selling 75% Stake of the Carrier
    Jet Airways (India) Ltd lenders led by State Bank of India (SBI) on Monday invited expression of interest (EoI) for a 75% in the debt-ridden carrier. The new buyer will also have to settle all existing debt of Jet Airways, as per a notice for inviting EoI.
     
    In the notice on its website, SBI Capital Markets, a unit of SBI that is appointed as advisor to the 26 lenders, said prospective bidders of Jet Airways should submit their EoIs for up to 75% stake in the carrier by 6pm local time on 10 April 2019.
     
    Bidders such as individuals, including foreign nationals, and consortium of up to three companies are allowed to bid for a stake in Jet Airways subject to Indian laws.
     
    According to estimates, Jet Airway's total debt stood at Rs8,000 crore. 
     
    The consortium of lenders, led by SBI, would be infusing Rs1500 crore for operational costs, as per the resolution plan approved by Jet Airways board.   
     
    Last month, Jet Airways founder Naresh Goyal and his wife Anita stepped down from the board. The Goyals also agreed to reduce their stake to 25.5% from 51%.
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