US markets regulator steps up probe into ICICI Bank’s accounting practices
The US markets regulator Securities and Exchange Commission (SEC) has intensified its investigation into alleged wrongdoings at India’s second-largest private lender ICICI Bank Ltd, according to two people familiar with the development. SEC officials spoke to top ICICI Bank executives, including chief financial officer Rakesh Jha and general manager Rajendra Khandelwal, twice in the past few months, the most recent one being about two weeks ago. SEC, which started the probe in June 2016, sought details about the bank’s accounting practices, especially those related to loans disbursed between 2010 and 2016, many of which turned bad later and were alleged to be the ones on which the bank delayed provisioning, the people said, requesting anonymity. An email sent to ICICI Bank on Wednesday remained unanswered till the time of going to press. Judith Burns from SEC Office of Public Affairs declined to comment.
Cartelization penalty: NCLAT upholds fine on cement firms, 11 companies and industry body to pay Rs 6300 crore
In a major setback for cement manufacturers, the National Company Law Appellate Tribunal (NCLAT) on Wednesday upheld the hefty penalty of about Rs 6,300 crore imposed on 11 leading cement companies by the Competition Commission of India (CCI) through its order in 2012 and 2016 for price cartelization. The companies include ACC, Ambuja Cement, UltraTech Cement and Jaypee Cement as well as the industry body, Cement Manufacturers Association (CMA). The CMA as well as the companies concerned had appealed against the CCI’s order imposing the fine in the NCLAT, which the two-member bench headed by the chairman justice SJ Mukhopadhaya dismissed saying that they found no merit in their pleas. The companies have no option now but to appeal against the order in the Supreme Court.
Liberty House gets NCLT nod for bid to acquire Amtek Auto
The Chandigarh bench of the National Company Law Tribunal (NCLT) on Wednesday approved the resolution plan by single bidder Liberty House to acquire the assets of debt-laden Amtek Auto Ltd. The company was among the first list of 12 large bad loan accounts that the Reserve Bank of India (RBI) identified for insolvency resolution. The division bench of Justice R.P. Nagrath and technical member Pradeep R. Sethi approved the resolution plan following an insolvency plea filed by Corporation Bank against the auto component manufacturer. Liberty House is part of the Sanjeev Gupta-led global industrial group GFG Alliance.
One step back: NCLT rejects Jyoti resolution plan
The Mumbai bench of the National Company Law Tribunal (NCLT) on Wednesday rejected the sole resolution plan for the bankrupt Jyoti Structures. The plan had been submitted by a team led by Sharad Sanghi, MD & CEO of Netmagic Solutions. Sector experts believe the bid was thrown out because it reportedly envisaged a payment of only Rs 3,000 crore over 15 years, a haircut for the lenders of 60%. Although the engineering company reported losses of Rs 1,483 crore in 2016-17 on Rs857 crore in revenues, it is possible the liquidation value could be higher than Rs 3,000 crore, they said. While the financial creditors of the company claimed Rs 8,226 crore, the NCLT has admitted claims worth Rs 7,625 crore. State Bank of India is the largest lender to the company with an exposure of Rs 1,962 crore.
Mitigating the operational risk posed by the IBC
In 1997, during the Asian financial crisis, the Thai baht went into a steep fall. Economists believed that the resulting increase in exports and reduction in imports would restore the economy to good health. However, exporters did not have access to trade credit, and the opportunity remained untapped. Capacity utilization in the Thai economy dropped from 75% to 55% over two years. Risks of a similar nature, though not the same magnitude, can affect the Indian economy in the wake of the current process of the Insolvency and Bankruptcy Code (IBC). Recall that, in March, a day after Tata Steel emerged as the highest bidder for Bhushan Steel, engineering and construction major L&T, an operational creditor (i.e., an unpaid vendor) of Bhushan Steel, moved the National Corporate Law Tribunal (NCLT) claiming 962 crore.
Rajya Sabha passes Bill to attach assets of fugitive offenders
The Rajya Sabha on Wednesday cleared a Bill to attach assets of fugitive economic offenders — including Nirav Modi, Mehul Choksi and Vijay Mallya who flee India to escape the reach of law — even without conviction. The financial limit for invoking the provisions of the Fugitive Economic Offenders Bill (FEOB) is Rs 100 crore. Since the Lok Sabha already passed this Bill in the previous week, it now requires the Presidential assent before it can be made into a law and replace an ordinance that was promulgated in April. While the existing Prevention of Money Laundering Act (PMLA) has provisions for confiscation of an offender’s assets, it can be done only after his conviction, and the attachment is also limited to the proceeds of crime. However, this Bill provides for attachment of all the assets of offenders, irrespective of whether these are the proceeds of crime or not.
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