CCI nod for sale of Mallya-owned distillery in Chennai

BS Reporter  |  Chennai  

December 29, 2013 Last Updated at 20:47 IST

The deal involves transfer of USL's entire undertaking, business activities and operation of its unit at Poonamalle, Chennai 

The Competition Commission of India (CCI) has cleared the sale of distillery owned by Vijay Mallya-led United Spirits Ltd (USL) near Chennai to Enrica Enterprises Private Ltd (EEPL).

Through the acquisition, the promoters of EEPL are planning to enter the business of manufacturing the India-made foreign spirits.




The deal involves transfer of USL’s entire undertaking, business activities and operation of its unit at Poonamalle, Chennai. The unit is a distillery for manufacture of Indian-made foreign spirits (IMFS) to EEPL by way of slump sale. The sale consideration was estimated to be Rs 125-crore.

The distilling plant has a capacity for one-million cases a month, and it was acquired by USL nearly five years ago from Balaji Distillers. It was reported that USL was operating this plant at around 55 per cent capacity thus being a drain on the company.

Enrica would make certain IMFS brands of USL using technology and know-how and under the trademark of USL, according to a franchise agreement signed on December 4, 2013, along with the master sale agreement between the two companies.

Pursuant to the agreement, Enrica will bottle USL's brands and in consideration for this bottling arrangement, USL will earn a royalty income.

In the order, the CCI said: “Considering the facts on record, the details provided under the Act, the Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore the Commission hereby approves the proposed combination.”

While the Mallya-promoted USL is a listed company, EEPL, which is a private entity, is promoted by Spurthi Holdings Pvt Ltd, Viki Investments and Properties LLP and Sree Shyam Sayi Investments and Traders Pvt Ltd. The private entity has diversified business interests and now proposes to enter the business of manufacturing IMFS through this acquisition.

RBI grants new status for CCIL

BS Reporter  |  Mumbai  January 2, 2014 Last Updated at 00:21 IST\

CCIL is authorised and supervised by RBI under Payment and Settlement Systems Act, 2007

Reserve Bank of India (RBI) granted the status of qualified central counterparty (QCCP) to Clearing Corporation of India Ltd (CCIL) in the Indian jurisdiction on Wednesday.

CCIL has qualified as a QCCP in view of the fact that it is authorised and supervised by RBI under the Payment andSettlement Systems Act, 2007.

“CCIL is also subjected, on an on-going basis, to rules and regulations that are consistent with the Principles for Financial Market Infrastructures issued by the Committee on Payment and Settlement Systems and International Organisation of Securities Commissions,” RBI said.

Viceroy Hotels gets bankers nod to sell Chennai division-J W Marriott toCeebros Hotels

T E Narasimhan  |  Chennai  January 2, 2014 Last Updated at 00:02 IST

The sale is estimated to be worth Rs 480 crore

Hyderabad-based Viceroy Hotels, owner of the J W Marriott property here, on Wednesday informed the BSE exchange it had concluded a deal to sell its Chennai assets, including the hotel and residential projects, to Ceebros Hotels. The sale is estimated to be worth Rs 480 crore.

The company had started developing a five-star hotel in the city under the J W Marriott brand.

Earlier this year, Viceroy Hotels said its board had approved a proposal to sell the Chennai project division to Ceebros for a total consideration of Rs 480 crore. In June, the company’s shareholders approved the sale proposal.

The 2012-13 annual report said the sale would cut its debt by Rs 560 crore. The company was had sought no-objection certificates from State Bank of India, State Bank of Mysore, State Bank of Bikaner & Jaipur, Indian Overseas Bank, Allahabad Bank and UCO Bank.

The loans pertaining to the Chennai hotel could not be repaid because the project was still being built while the repayment period began according to the original schedule. After the sale, all the associated loans would be repaid, the company has said. Consequently, Viceroy would not be defaulting on any loans, it added.
 
 
 

President signs Bill, Lokpal set to become law

The Lokpal Bill, after rounds of debate and discourse in the Houses of 
Parliament, as well as the greater outside, is set to become a law after
 receiving presidential assent from Pranab Mukherjee.

PTI : New Delhi, Wed Jan 01 2014, 19:02 hrs few mts ago

The much-awaited Lokpal Bill got the assent from President Pranab Mukherjee on Wednesday, providing for creation of an anti-graft watchdog which will bring under its purview even the Prime Minister with certain safeguards.

The Bill was passed by the Rajya Sabha on December 17 and by the Lok Sabha the next day.

The Lok Sabha secretariat had sent to the Law Ministry a copy of the Bill on Tuesday, which had been signed by Speaker Meira Kumar. The Bill was then forwarded to the Rashtrapati Bhavan for the President's assent, official sources said.

The President has signed the Lokpal Bill, the sources said.

The Bill was to become an Act after the signing by the President and following certain procedures.

After the assent by the President, Secretary of the Legislative Department in the Law Ministry will sign it and send it for publication in the official gazette.

The Bill aims to set up institution of Lokpal at the Centre and Lokayuktas in states by law enacted by respective legislatures within one year of coming into force of the Act.

The Bill was first passed by the Lok Sabha at the fag end of the winter session of 2011, but not by the Rajya Sabha, where it was debated but the house was adjourned before voting on it.

Later, a select committee of the Rajya Sabha had suggested changes in the Bill, most of which which were incorporated and approved by the Union Cabinet. Following the amendments, the Rajya Sabha had passed the bill.

The Lokpal had become a bone of contention among ruling Congress, opposition BJP and civil societies with each one of them wanting to make changes in it to make it more effective.

A ticking time bomb?

B S :Editorial Comment  |  New Delhi  Jan  1, 2013

Re-examine government's role as owner of banks

The problem of asset quality has become increasingly significant in the
 Indian banking system. However, as was reported in this newspaper 
on Tuesday, there is a striking asymmetry in the nature of the 
problem across different categories of banks. Over
 the past five years, while private sector banks have seen
 some improvement in the ratio of their non-performing 
assets (NPAs) to outstanding credit,public sector banks
 as a group have seen a marked deterioration. The latter
 collectively account for over 86 per cent of NPAs, while 
providing about 75 per cent of credit. In response, the
 Reserve Bank of India has proposed some measures,
 including early recognition of problem assets and
 information sharing between banks. These will be
 finalised in a few weeks based on public feedback.
 While such measures may help alleviate the problem,
 a robust solution must recognise and respond to some
 structural characteristics of government-owned banks,
 which have contributed to the build-up.

An important one is the level of independence and autonomy
 that a typical bank enjoys in making its credit decisions. 
Anecdotal evidence suggests that various channels of influence 
play a role in making credit decisions, thereby diluting the 
effectiveness of the credit appraisal process. Occasional 
revelations, such as the loans-for-bribes case involving Money
 Matters Financial Services and Punjab National Bank a few 
years ago, might be merely the tip of the iceberg.

 These tendencies are reinforced by the criteria for the
 appointment of independent directors on the boards of 
public sector banks, which are seen less as effective 
governance mechanisms and more as opportunities for 
extracting rents. Another issue is that of incentives. 

Given the relatively short tenures of chairpersons and
 executive directors, the immediate recognition flowing
 from an acceleration of credit growth perhaps outweighs
 the negative impact of asset quality problems, which
 usually materialise during the successor's tenure.
 This has contributed to the well-known succession
effect, in which a new chairperson makes provisions
 for all the bad assets from the predecessor's term,
 thereby cleaning the slate for his or her term, but 
also making the earnings pattern volatile.

These structural factors require a much deeper 
examination of the government's role as owner of banks.

 The philosophical dimension of this issue relates to 
the fulfilment of the social mandate for which banks
 were nationalised in 1969 and again in 1980. 
Has this been fulfilled and to what extent?

 Is the current situation one in which the social 
mandate itself is being compromised by weak 
governance and incentive mechanisms? 

The fact that the government is now seeing
 new private banks as agents of financial inclusion 
is one indicator that it is not completely satisfied 
with the performance of the banks that it owns. 

The practical aspect of the issue relates to the 
need to enhance the capital of banks saddled 
with high NPAs. If the government wants to 
preserve majority ownership, it perforce becomes
 the predominant source of new capital.

 It clearly does not have the fiscal space to do this,
 now or in the next couple of years.

 How is it going to reconcile the need for control 
with the imperative of more capital?

MadrasHC restrains SRM from sacking staff of proposed channel

BS Reporter  |  Chennai  

December 31, 2013 Last Updated at 20:39 IST

The company had plans to launch an Engli

sh news channel, which it scrapped

 The Madras High Court has restrained New Generation Media 
Corporation Private Limited, part of the SRM Group, 
from sacking employees or implementing pay-cuts
as part of its “alleged” closure of its proposed
 English channel launch.

The Chennai-based group, which has interest in education and media,
 was planning to launch a 24-hour News channel under New Generation 
Media Corporation, which already runs a 24- hour Tamil news channel
 Puthiya Thalamurai, Tamil GEC Pudhu Yugam, and a magazine 
Puthiya Thalaimurai.

While company officials were not available for comment, an employee
 said 29 staff, who were roped in for the proposed English News 
channel, had approached the court against the management decision
 to either cut 50 per cent salary or retrenchment with a severance pay
 of three  months salary.

This announcement was made by the management on December 
26 and employees were asked to select one of these options before 
December 30.

Confirming the order, R Vaigai, advocate who appeared for the
 employees, said the petition was admitted and the interim
 injunction was passed restraining the company from the 
pay restructuring or termination of employees.

Further, notices were issued to the company and the Tamil Nadu 
government considering that labour is a state subject.

According to rules, a company cannot terminate a large number of
 employees, like in this case, without prior permission of the state 
government, she added.

CCCL opts for debt recast scheme

BS Reporter  |  Chennai  December 31, 2013 Last Updated at 20:41 IST

Delay in several infrastructure projects including the Chennai Metro has affected the company's balance sheet, say sources

Chennai-based Consolidated Construction Consortium Ltd (CCCL) has applied for the Corporate Debt Restructuring Scheme. "The necessary application for the same is being filed with CDR cell for its approval," the company said in a filing to the exchanges.

R Sarabeswar, chairman and chief executive officer of CCCL, did not offer a comment when contacted.

Several infrastructure projects, including Chennai Metro, have been delayed due to various reasons affecting the company's balance sheet, according to industry sources. The company owes around Rs 740-crore to banks and a major share of it is short-term loans, till the end of last fiscal year.

In October, 2013, Icra had revised the company's rating on various long-term and short term fund-based facilities and NCDs to Icra D. "The revision in the ratings factors the delays observed in debt servicing by CCCL against the continuing net losses, and elevated working capital intensity over the last 18 months," an ICRA report said.

CCCL’s consolidated operating income declined 10 per cent in 2012-13 as against 2011-12. Its operating and net margins also declined by around 400 basis points in 2012-13 vis-à-vis the previous year and stood at 0.85 per cent and (-4.32) per cent respectively, it said. The net losses continued in the year-to-date of 2013-14 also, said the report on October, 2013.

 

"These losses combined with the increased working capital intensity have led to higher than anticipated debt levels and inadequate debt servicing capability for the company. The management’s efforts to reduce the debt position of the company through liquidation of its land banks have not materialised till date. Accordingly, the utilisation of the fund based bank credit facilities remained high, providing limited liquidity buffer for the company," it said.

 

The company has made a net loss of Rs 101.77 crore during the quarter ended September 30, 2013, as against the net loss of Rs 14.92 crore for the same period during previous fiscal year. The total income dropped to Rs 248.52 crore, as compared to Rs 488.13 crore during the quarter ended September, previous year, according to BSE.

 

The company has been providing services including Construction, Engineering, Procurement, and Project Management to various sectors.