New Delhi: A 27-member Committee of Creditors (COC) consisting of 24 Educomp Solutions Limited (ESL) banks and lenders and three lenders of its subsidiary Edu Smart Services Private Limited (ESSPL) has recently cleared a proposal for the sale of ESL to Nasdaq-listed Ebix Inc., a leader in insurance and payment processing software and exchanges.
Ebix Inc. has reportedly earmarked USD 300 million for investments in India, including acquiring companies in the digital learning and remittance space, and after various discussions by COC members on resolution plans and evaluation criteria for close to a year, the resolution plan submitted by Ebix Inc. was approved
A new law on insolvency and resolution process has facilitated this transfer of ownership and operational management.
“The purpose of IBC (Insolvency and Bankruptcy Code) is to revive companies like Educomp, Essar Steel, Binani Cements etc. which have a fundamentally strong model but a stressed balance sheet by bringing in a new management with strong balance sheets. This is the only way to revive these vital sectors of the economy. What is important is that the process has produced a highest bidder which complies with the processes and standards of the IBC, including stringent checks on the connected party issue which were conducted by M/s Kroll,” one of the bankers involved in the resolution process said on condition of anonymity.
He maintained that it has been one of the best run processes so far, with the COC supervising every stage of the resolution process under the watch of the Resolution Professional and process advisors Price WaterHouse Coopers.
A transaction audit was carried out as per existing IBC norms and barring a few technical issues, Educomp’s resolution and operational handover process was found to be satisfactory.
The banker also mentioned that Grant Thornton carried out a forensic audit on the company and did not come up with any adverse findings.
Mahender Khandelwal, Educomp’s insolvency resolution professional, clarified several aspects of the resolution process, including aspects such as conflict of interest.
The CoC has said it has examined all agreements between the two parties.
The detailed transaction audit under the provisions of the IBC was conducted by the BDO over a period of three years. All issues were addressed, discussed and the CoC voted in favour of the resolution.
Educomp CFO Ashish Mittal said, “It is an accepted fact that Educomp has gone into insolvency because of delinquent customers over the years and over 5000 arbitration cases are currently being fought by the company against schools across the country. As such, necessary statutory provisions have been made in the financial accounts.”
It may be recalled that the Union Cabinet had last year approved an ordinance to introduce certain changes to the Insolvency and Bankruptcy Code (IBC).
It was stated then the proposed changes in the IBC were being done to rationalise the process of selecting buyers for stressed assets. It was decided to introduce the provisions with a view to improve the quality of insolvency resolution.
The provisions briefly included (1) Prescribing eligibility criteria with respect to prospective resolution applicants (2) Inserting a new section to lay down a comprehensive criteria with respect to persons ineligible to be resolution applicants (3) Providing a robust due diligence framework to enable the Committee of Creditors (COC) to make proper assessment of credit worthiness and other relevant parameters of the applicant as may be prescribed by the Board, before approving a resolution plan.
The changes in the IBC were aimed at giving companies a chance to revive, bring in fresh capital into the country, save jobs and reduce the backlog of non-performing assets.
RBI needs to ensure stability: Shaktikanta Das
New Delhi: The head of the Reserve Bank of India (RBI) said he would take the steps necessary to maintain financial stability in the country and help create favourable conditions for growth.
India’s economy has grown because of measures such as the nationwide goods and services tax and the insolvency and bankruptcy code that prevents wilful defaulters from bidding for stressed assets, Shaktikanta Das said in his address to an investor roundtable.
The country’s growth story is backed by its strong domestic fundamentals, he said, citing lower inflation.
Annual retail inflation rate dropped to an 18-month low of 2.19 per cent in December, strengthening the views of some economists that the central bank could ease monetary policy next month.
India’s top business groups on Thursday urged the central bank to cut its benchmark interest rate by at least half a percentage point and lower the cash reserve ratio it imposes on banks.
The country also needs to watch out for any sudden turbulence in the gloal financial market, Das said.
Centre removes two PNB executive directors for lapses in Rs 13,500-cr fraud
Chennai:The Central government has removed two Punjab National Bank (PNB) Executive Directors — Sanjiv Sharan and K.Veera Brahmaji Rao — for the lapses in the Rs 13,500 crore fraud allegedly perpetrated by absconding diamantaire Nirav Modi.
The PNB has intimated the action to the stock exchanges.
“We welcome the Central government’s action to dismiss the two Executive Directors. The scam of such proportions could not have happened without the knowledge of the top management,” C.H. Venkatachalam, General Secretary, All India Bank Employees’ Association (AIBEA), told IANS.
“Perhaps for the first time, the Centra has removed the Executive Directors of a nationalised bank under the Nationalised Banks (Management and Miscellaneous Provision) Scheme, 1970. All these days it was said the top management of government-owned banks — Chairman, Managing Director, Executive Directors — are governed only by the contract of appointment.
“It is also good that the central government has followed the due process of giving the two PNB Executive Directors opportunity to put forth their views before dismissing them,” Venkatachalam added.
According to the Central government’s notification, on July 3, 2018, Sharan and Rao were issued a show cause notice as to why they could not be removed from office for having failed to exercise proper control over the functioning of PNB, thus enabling the fraud through the misuse of SWIFT at the bank’s Brady House branch in Mumbai.
After considering Sharan and Rao’s replies and the comments of the bank’s Board, the Centre removed them from office as it found it was expedient in the interests of PNB.
According to the notification, the dismissal of Rao is subject to the outcome of a plea in the Delhi High Court.
“We are happy to see some action being taken. Whether it is only the two Executive Directors and other officials are also involved in the scam has to be probed in full,” Venkatachalam said.
According to him, in the past, low-level officers would have been the scapegoats for such massive scams.
“With the action taken on the top management, people will be satisfied that public sector bank officials are answerable for their lapses,” Venkatachalam added.
In this new world, data is the new wealth: Ambani
Mumbai: Reliance Industries chairman and managing director Mukesh Ambani urged Prime Minister Narendra Modi to take steps against ‘data colonisation’, specially by global corporations, stating that Indian data must be owned by Indians.
Invoking Mahatma Gandhi’s movement against political colonisation, Ambani said India now needs a new movement against data colonisation.
“Gandhiji led India’s movement against political colonisation. Today, we have to collectively launch a new movement against data colonisation,” he said Gandhinagar at the Vibrant Gujarat Global Summit.
Stressing that, in this new world, data is the new wealth, Ambani said, “India’s data must be controlled and owned by Indian people and not by corporate, especially global corporations.”
He further said, “For India to succeed in this data driven revolution, we will have to migrate the control and ownership of Indian data back to India. In other words, give Indian wealth back to every Indian.”
Stating that the “entire world has come to recognise” Modi “as a man of action”, Ambani said, “Honorable Prime Minister, am sure you will make this one of the principal goals of your digital India mission.”
Later in the day, countering Ambani’s call, Governor – Commonwealth of Kentucky, Matthew Griswold, asked Modi “to think in the opposite” in order to realise the tremendous opportunity that lies in Indo-US partnership.
“Honorable prime minister you have been asked from this stage to think about limiting the amount of competition, limiting the exchange of ideas, information and goods. I would encourage you to think in the opposite,” he said.
While stating that it is important to put the people of India first, Griswold said, “It is also important to put their opportunity and our opportunity as citizens of the world to trade with one another and exchange ideas because iron sharpens iron.”
The greatest possibility comes from the exchange of these idea, he added.
“If we can cut the regulations, cut the bureaucracy, cut the red tape, the opportunity is enormous between our nations,” he added that India is now the 10th largest trading partner for the US and “climbing quickly”.
“The opportunity before us between India and the United States is incredible, but responsibility falls on each of one us, those of us in elected positions, those of you in the industry, those of you who represent various constituencies, we have much work to do…we must do this, ” Griswold said.