HYDERABAD | TUESDAY, 31 DECEMBER 2019 COMPANIES 3. <

Rattan Amravati’s ~4K-cr debt tobe taken overby Goldman, VardeSHREYA JAINew Delhi, 30 December

Rattan India’s Amravati powerproject (1,350 MW) has con-cluded its debt restructuring

with new lenders coming on board. Goldman Sachs and Varde

Partners will take over ~4,050 crore ofthe total debt from existing lenders.

This also includes 15 per centequity each in the project. The newlenders have used the Aditya BirlaAsset Reconstruction Company(ARC) platform for the deal.

The total debt exposure of theconsortium of lenders was ~6,575crore. This would entail 36 per centhaircut by the consortium led bystate-owned Power FinanceCorporation (PFC). There were 12lenders to the projects, includingState Bank of India, Bank of India,Punjab National Bank and Axis Bank,among others.

Speaking with Business Standard,Rajiv Rattan, chairman, Rattan Indiagroup, said there was immense inter-est from foreign lenders for Indianassets. “This is the first-of-its-kinddeal where fresh capital is beinginfused. The consortium of newlenders also has foreign firms whichis also a first for the sector,” he said.

He further said that there aremany lenders which are sitting onthe fence. They want to infuse capitalin Indian assets and resolve the non-performing assets (NPA) situation.

Amravati is part of the list of 40stressed assets in the power sector.

The project has undergone twodebt-restructurings in the past, ofwhich the second one could not beconcluded due a circular of theReserve Bank of India (RBI) issuedin February 2018.

The circular directed banks toresolve all stressed assets in 180 daysor initiate insolvency proceedings atthe National Company Law Tribunal(NCLT). A Supreme Court order inSeptember 2019 quashed the circular.

Under the RBI’s new prudentialframework for resolution of stressedassets, lenders to Amravati invitedbids for the project.

Company executives said therewill not be any change in the rate atwhich power is sold from the proj-ect. The power purchase agreement

(PPA) does not have any provisionfor change in tariff.

The levellised power tariff ofAmravati is ~3.26 per unit and theproject cost was ~7,493 crore (alongwith cost overruns). The projectfaced delays due to shortage of coalfrom Coal India and cost overrunsdelayed payments from states it wasselling power to.

The project is also under litiga-tion of pass through of cost overrunson the final power rate.

Rattan said the company will notbe making any fresh investment inthe thermal power sector. “We don’thave any plan for a greenfield invest-ment in the thermal sector. However,as we have land, connectivity andwater at Amravati, we may expandthe project and construct the secondphase. However, that will depend on

when legal issues of the existing unitare resolved,” he said.

Rattan is hopeful the variablesthat landed the project in troublewon’t repeat. “The sector is improv-ing consistently. The letter of creditsystem has improved the paymentmechanism,” he said. Given the cur-rent coal supply, the company plansto run the project at 60 per cent plantload factor (PLF) or operating ratio. Itis 40 per cent right now. Amravtaihas a fuel supply agreement withSouth Eastern Coalfields of CIL for5.5 million tonne supply.

Rattan India’s another thermalpower unit in Nashik is also understress. “For the Nashik project, weare working with the lenders. Withthe success of Amravati, we are hope-ful that there will be similar interestin other assets,” said Rattan.

This is the first of its kind deal where fresh capital is being infused in a stressed asset in India

| Rattan India Power Amravati thermal power project’s capacity is 1,350 MW

| Additional capacity envisaged: 1,000 MW

| Total project cost with overruns: ~7,493 crore

| Debt: ~6,296 crore

| Debt taken over by Goldman Sachs andVarda Partners: ~4,050 crore

| Levellised tariff: ~3.6 per unit

| Tariff with cost overruns: ~4 per unit

POWER PLAY

RIL, BP pay $36 mn forNiko’s KG-D6 block exitPRESS TRUST OF INDIANew Delhi, 30 December

Reliance Industries and UK’sBP paid $36 million to get theirdefaulting Canadian partnerNiko Resources to leave theeastern offshore, KG-D6 block.

In a statement, Niko said ithas left the KG-DWN-98/3block and its 10 per cent stakehas been taken over byReliance and BP.

The firm was paid $36 mil-lion to settle an arbitration ithad initiated against Relianceand BP, trying to force it out ofthe block over default in pay-ment.

“An amendment to the pro-duction sharing contract for theD6 Block in India has been exe-cuted, reflecting the assign-ment of the 10 per cent interestpreviously held by the compa-ny’s indirect subsidiary, Niko(NECO) to the remaining inter-est holders in the block,Reliance Industries and BPExploration (Alpha),” the state-ment said.

Subsequent to this,Reliance’s stake in KG-D6 hasgone up to 66.67 per cent from60 per cent and that of BP to33.33 per cent from 30 per cent.

“Niko NECO had enteredinto a settlement agreementwith Reliance and BPEALunder which it agreed to with-draw from D6 PSC and settleits arbitration case filed underthe rules of the London Courtof International Arbitration in

December 2017 in exchange fora settlement amount of $36million, subject to adjustmentprior to closing,” it said.

The settlement agreementis subject to certain conditionsprecedent, including the exe-cution of the amendment tothe D6 PSC, it said, adding the$36 million will go lenders tosettle a part of the debt.

Niko, which defaulted onpayment of loans to its lenders,had been unsuccessful in seek-ing a possible buyer for its 10per cent stake in Bay of Bengalblock KG-D6 or securing financ-ing for its share of the USD 5 bil-lion R-Cluster, Satellite Clusterand MJ development projectsin the block. This led to thecompany defaulting in makingpayments for its share of devel-opment cost. Reliance, beingthe operator of KG-D6 block,slapped a default notice on Nikosoon after.

Under the terms of the joint

operating agreement (JOA)between the participatinginterest holders in the KG-D6production sharing contract(PSC), during the continuanceof a default, the defaulting par-ty shall not have a right to itsshare of revenue (which shallvest in and be the property ofthe non-defaulting parties whohave paid to cover the amountin default). In addition, if thedefaulting party does not curea default within 60 days of thedefault notice, the non-default-ing parties have the option torequire the defaulting party towithdraw from the KG-D6 PSCand JOA. In December 2018,Reliance and BP sent Niko anotice asking it to withdrawfrom KG-D6.

Parallelly, they approachedthe sector regulator theDirectorate General ofHydrocarbons (DGH) and theOil Ministry for approval to takeover Niko's share.

In December 2018, Reliance and BP sent Niko a notice asking it to withdraw from KG-D6

FROM PAGE 1

10 newentrants...Consumer goods makers, real estate devel-opers, and retail lenders were the biggest gain-ers in 2019, while pharma entrepreneurs,automakers, and owners of capital goodscompanies saw sharp erosion in wealth inthe current calendar year.

Analysts attribute this to investors’ pref-erence for consumer-demand related stocksin an otherwise lacklustre economic envi-ronment. “This is an excellent time to be a pro-moter of a profitable consumer goods com-pany or retail lender. These sectors continueto grow, even if other sectors of the economyare stagnating,” says G Chokkalingam,founder & managing director (MD),Equinomics Research & Advisory Services.

The sectoral dichotomy shows in the richlist for 2019.

Ramesh Kumar Dua, promoter and MD offootwear maker Relaxo Footwears, is thebiggest gainer and newest member of the bil-lionaire promoter’s club. His family net worthis up nearly 65 per cent in the last 12 monthsto around ~10,800 crore, or $1.5 billion, at themonthly average exchange rate. The familywas worth around ~6,500 crore, or $900 mil-lion, at the end of December 2018.

The Dua family owned 71 per cent stake inRelaxo at the end of September this year,down from 74.2 per cent at the end ofDecember 2018. The company’s m-cap is up72 per cent in the current calendar year, mak-ing it one of the top performing consumerstocks on the bourses.

Dua is followed by Mayank Singhal of agrochemical maker PI Industries, whose shareprice is up 70.4 per cent during the year. TheSinghal family is now worth around ~10,400crore, or around $1.5 billion, up from around~6,000 crore at the end of 2018. The familyowns 51.4 per stake in the company,unchanged from last year.

Irfan Razack, chairman & MD, PrestigeEstates Projects, a real estate player inBengaluru, also made it to the list this year, asinvestors bid up his company’s share prices.The family stake in the company is now wortharound ~8,800 crore, up 53.4 per cent duringthe year so far. The family owns 70 per centstake in the company.

Other new entrants to rich list include G MRao of GMR Infra, Sanjay Agrawal of AU Small

Finance Bank, and Motilal Oswal andRamdeo Agrawal of Motilal Oswal FinancialServices.

Ravi Raheja, owner and promoter ofShoppers Stop, also made it to the BillionaireClub, thanks to the listing of his company,Chalet Hotels.

The analysis is based on promoters’ stakeand m-cap of a common sample of 822 com-panies that are either part of the BSE500, BSEMidCap, or BSE SmallCap indices. The sam-ple excludes government-owned companies,listed subsidiaries of global multinationals,institution-owned companies and their sub-sidiaries, such as Larsen & Toubro, HousingDevelopment Finance Corporation, and ICI-CI Bank, among others.

The sample has also been adjusted forseparately listed subsidiaries of holding com-panies, such as Reliance Industries, Tata Steel,Grasim Industries, Bombay Burmah TradingCorporation, Reliance Capital, Bajaj Finserv,Godrej Industries, Mahindra & Mahindra,and Kama Holdings, among others.

In contrast, Satyanarayan Nuwal of SolarIndustries, R G Chandramogan of HatsunAgro Products, Ajanta Pharma’s MannalalAgrawal, and Nusli Wadia exited the billion-aire list due to a slump in share prices of theirkey operating companies.

It must be mentioned that Wadia’s stake inbiscuit and packaged food maker BritanniaIndustries — the group’s most valuable andmost profitable company — is owned byBombay Burmah, a relatively small company,in terms of profits and m-cap. The same is truefor Arun Bharat Ram of SRF and VenuSrinivasan of TVS Motor.

Huawei... The second half of the calendar year sawHuawei battling to reserve its space in India’s5G footprint. The government had constitut-ed a panel, headed by its principal scientificadvisor, to decide on Huawei’s participationin the 5G trials. The trials would establishused cases in the country as a precursor to thefull-fledged launch of the 5G services.

Huawei came under a cloud after allega-tions that the firm’s electronic and telecomdevices helped China spy on US corporationsand agencies. Huawei has been barred in

Australia, and Japan. Russia,Turkey, and Saudi Arabia havewelcomed it.

The Huawei India CEO hadearlier said the company wants totap India, which proposes to bethe second biggest 5G market. Hehad also said India is a very uniquemarket. “You need to deeplyunderstand it and have a long-term strategy,” he had said.

Bharti Airtel Chairman SunilBharti Mittal had also come out insupport of Huawei. Speaking atthe World Economic Forum,Mittal had said the company, inover the last decade, had becomevery good with its products. "To apoint where I can safely say theirproducts in 3G and 4G that wehave experienced, are significant-ly superior to Ericsson and Nokia.I use all three of them," Mittal hadsaid.

Huawei has been trying tocompete with its rivals such asNokia, Ericsson, and Samsung tobecome the top player in 5G. It hasso far secured 50 commercial 5Gcontracts -- 28 in Europe, 11 in cen-tral Asia, six in Asia-Pacific, four inSouth America and one in Africa.

The government has begunthe process of auctioning the next-generation 5G spectrum with theaim of improving data speed and

bringing in Internet of Things, which willenable robotic surgeries and driverless carsamong a host of other things.

On December 20, the DigitalCommunications Commission, the apexdecision-making body, at the telecom depart-ment approved the auctions across 22 circles.A lion’s share, 6050 MHz, has been set asidefor 5G spectrum.

Jio adds 9.1 mn...However, Jio said the full impact of that movewould be visible in November numbers.

The number of telephone subscribers inIndia increased from 1,195.24 million inSeptember to 1,204.85 million in October,showing a monthly growth rate of 0.80 percent. Urban telephone subscription increasedfrom 677.95 million at the end of September to681.69 million at the end of October. Ruralsubscription increased from 517.29 million to523.16 million during the same period. Themonthly growth rates of urban and rural sub-scription were 0.55 per cent and 1.14 per cent,respectively, during October.

Jammu & Kashmir showed negativegrowth of 0.39 per cent in wireless subscribersgrowth during the month as communicationservices remained suspended in the regionwith post-paid services restored in the secondhalf of October. Madhya Pradesh service areashowed maximum growth of 2.86 per cent intheir wireless subscriber during the month.

Wireline subscribers declined from 21.49million to 21.45 million. Net decline in thewireline subscriber base was 0.04 millionwith a monthly decline rate of 0.20 per cent.The share of urban and rural subscribers intotal wireline subscribers were 87.49 per centand 12.51 per cent, respectively.

The top five wired broadband serviceproviders were BSNL (8.62 million), Airtel(2.40 million), Atria ConvergenceTechnologies (1.49 million), Hathway Cable &Datacom (0.87 million) and Jio (0.79 million).The top five wireless broadband serviceproviders were Jio (364.33 million), Airtel(130.45 million), Vodafone Idea (115.78 mil-lion), BSNL (13.64 million) and MTNL (0.20million).

RBI wants UCBs...“Loans” for the purpose will include all types offunded and non-funded exposures in thenature of credit.

If the exposure is in the case of term loans,or non-fund based, it can continue till the endof its repayment period, or maturity, the RBI’sdraft circular said.

Tier-1 capital is the core capital of a bank,while capital funds comprise paid-up capitaland free reserves. Exposure includes bothfunded and non-funded credit limits andunderwriting and similar commitments.

In its draft circular, the RBI said the largeexposure of banks to a single borrower orgroups of connected borrowers led to credit-concentration risk. “When large exposures toa few single parties/groups become non-per-forming, it affects the capital/net worth of theconcerned bank significantly and, at times,leads to liquidity and/or solvency risk for thebank,” the draft circular said.

The central bank sought to bring downlarge-ticket loans in UCBs as such “predomi-nance of large ticket loans in the bank’s portfolioreduces diversification of credit risk and alsoreduces the scope for greater financial inclusionwhich is one of the main roles of UCBs”.

The UCBs should have a board approvalaction plan for compliance with the revisedexposure norms and priority-sector lendingtargets, the RBI said, adding the banks shouldestablish an appropriate mechanism to reg-ularly monitor the progress made under theaction plan.

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Monnet to start integratedsteel operations nextmonthISHITA AYAN DUTTKolkata, 30 December

Monnet Ispat & Energy —acquired by AION and JSWSteel through the insol-vency process — is lookingto start integrated steeloperations, in the wake of apick-up in steel demand.

JSW Steel’s joint man-aging director and groupchief financial officer,Seshagiri Rao, said, “Wehave completed expansionof pellet plant to 2.4 mil-lion tonnes and we are alsostarting the integratedsteel operations nextmonth. So things shouldlook better for Monnet.”

Currently, integratedoperations is completely

shut. Monnet, which owed

banks ~11,000 crore, wasone of the 12 non-perform-ing assets (NPAs) mandat-ed for resolution under theInsolvency andBankruptcy Code (IBC).

A ~2,875 crore resolu-tion plan, submitted byAION and JSW Steel(minority partner), wasapproved by the NationalCompany Law Tribunal(NCLT) towards the end ofJuly 2018.

JSW’s second quarterresults presentation men-tioned that steel makingoperations were impactedby earlier announcedmaintenance shutdownand repairs.