In a significant development following
Moneylife's
report, Supreme Infrastructure India Limited (SIIL) has withdrawn its proposed preferential issue of equity shares and convertible warrants that had raised serious concerns about corporate governance and public fund management.
Moneylife exposed the questionable nature of State Bank of India (SBI)'s planned investment in SIIL through preferential allotment, despite having written off over 93% of its loans to the company. (
Read: After Suffering a 93% Write-off in Its Loans, SBI Buying Equity in Defaulter Supreme Infrastructure!)
In a
regulatory filing, SIIL says, "(We) submit this letter to inform about the decision of the board of directors of the Company to withdraw and cancel the previously announced outcome of the board meeting held on Monday, 16 September 2024 and subsequentlyissued first corrigendum dated 18 September 2024 and second orrigendum on 20 September 2024 wherein the board of directors had considered and approved the 'issuance and allotment of equity shares and convertible share warrants by way of preferential issue on private placement basis (preferential issue)."
Moneylife's report, published on 23 September 2024, highlighted how SBI's decision to invest Rs24.33 crore for a 2.49% stake in SIIL raised alarming questions about risk assessment and potential conflicts of interest. The article pointed out that SIIL had defaulted on Rs1,023.42 crore of SBI loans, making the Bank's eagerness to take an equity position highly unusual.
The report sparked widespread debate and drew political attention, with the Indian National Congress quoting the
Moneylife report - calling for Reserve Bank of India (RBI) intervention to examine SBI's decision-making process. Congress leader Jairam Ramesh, quoting the
Moneylife report, had warned that such arrangements could create a dangerous precedent in India's corporate debt landscape. (
Read: Congress Asks RBI To Step In SBI Buying Shares in Defaulter Supreme Infrastructure)
SIIL's latest exchange filing withdrawing the preferential issue suggests that the increased scrutiny following Moneylife's exposé may have played a role in this decision. The company has not provided specific reasons for the withdrawal, simply stating that the board has decided to cancel the previously announced outcome.
This development underscores the importance of investigative financial journalism in ensuring transparency and accountability in the corporate and banking sectors. Moneylife's prompt reporting on the SBI-SIIL case appears to have catalysed a chain of events leading to the cancellation of a potentially problematic financial arrangement.
The withdrawal of the preferential issue raises new questions about SIIL's future plans for debt restructuring and the role SBI will play, going forward. It also highlights the need for stronger oversight mechanisms in public sector banks' dealings with defaulting companies.
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If only we had such an organization and team to pinpoint the various questionable by other arms of this govt, think how much the citizens could have achieved.
After putting in a lot of taxpayer money to sort out the Non Performing Asset (NPA) burden of Public Sector Banks (PSBs), Phone Banking channels appear to have been reactivated and this controversial investment by State Bank of India is clearly a glaring case.
By bringing the dubious SBI investment into light after having shaved off 93% of investment losses in an earlier investment with the same entity - has rightly questioned the decision making process of State Bank of India.