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SBI-Led Consortium Approves Suzlon Energy’s Debt Resolution Plan

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 1, 2020 5:38 AM 4 min read
Editorial

SBI-led consortium approves Suzlon Energy’s resolution plan. India stares at 136m job losses. Merger of 10 PSU banks to come into effect from April 1st as planned, says RBI. Banks yet to act on RBI EMI moratorium order.

 

 

INDIA

Merger of 10 PSU banks to come into effect from April 1st as planned, says RBI.

The Show Must Go On

The RBI has reported that the plan of merging 10 Public Sector Unit (PSU) banks into four bigger lenders is on schedule despite the country-wide lockdown amid the coronavirus outbreak, and will come into force from April 1st 2020. [Firstpost]

 

Banks yet to act on RBI EMI moratorium order.

Clear as Mud

Last week, in a major relief to the common citizen, RBI Governor Shaktikanta Das allowed borrowers to not pay any equated monthly installments (EMIs) for any loans until June 30th, subject to individual bank policy. 

 

However, even with just two days left for the next EMI cycle to begin, most banks, including the top lenders such as SBI, ICICI, HDFC and Axis, are unprepared to follow the RBI's order. 

 

With customers receiving notifications alerting them of their loan EMIs and need to maintain minimum balance, confusion ensues. [ToI]

 

GROWTH

The coronavirus lockdown will inevitably hurt the Indian economy.

Down in the Red

It doesn’t take rocket science to see why COVID-19 spells disaster for the Indian economy. Even before the virus struck, GDP growth had hit a decadal low, slowdowns had plagued most mainstream industries, and banks were struggling through a brutal bad loans crisis. COVID-19 added to the problems.

 

How painful will the COVID-19 hit be? Ratings agencies have some forecasts:

  • Moody’s: 2.5%
  • Standard & Poor’s: 3.5%
  • Nomura: -0.5%
  • Crisil: 3.5%
  • CARE Ratings: 3%
  • Economist Intelligence Unit: 2.1%

 

Read this article for more details. [TRANSFIN.]

 

Here's what ratings agencies have to say about about the country's GDP growth.

Stormy Waters Ahead

The United Nations Conference on Trade and Development (UNCTAD) posits that the world economy will enter a recession this year, and its repurcussions on the developing world could be more adverse than the Great Recession. The UN body said China and India are two countries that could avoid a recession – although it did not go into why they would be exceptions. [ToI]

 

 

TELECOM

TRAI asks telecom operators to extend validity period of prepaid users to ensure uninterrupted services. 

Stay Connected

Telecom Regulatory Authority of India (TRAI) has asked telecom operators to extend the validity period of prepaid users to ensure that everyone gets uninterrupted services during the 21-day nationwide lockdown.

 

"Under the circumstances, it is quite possible that those subscribers who wish to top up their prepaid balances or wish to extend subscription to a prepaid tariff using offline channels may face hardships and/or disruption of services," the regulator said. [News18]

 

Telecom companies granted additional six weeks to file monthly, quarterly reports due in April. 

Good News!

TRAI has given six weeks' additional time to telecom companies to file monthly and quarterly reports that are otherwise due in April, in the wake of the 21-day nationwide lockdown. [ET Telecom]

 

COMPANIES

SBI-led consortium approves Suzlon Energy’s resolution plan.

We've Got A Plan

An SBI-led consortium of banks has unanimously approved Suzlon Energy’s ₹14,000cr ($1,864m) debt restructuring plan.

 

As per sources, lenders are looking to take 10% equity in Suzlon Energy as part of the draft restructuring plan, which involves splitting of the total debt into sustainable and unsustainable portions. [CNBC TV18]

 

Shapoorji Pallonji Group looking to pledge 18.4% stake in Tata Sons for $1bn.

Business conglomerate Shapoorji Pallonji Group is reportedly looking to raise $1bn by pledging a part of its 18.4% stake in Tata Sons in order to pare its debts. [Livemint]

 

 

LOCKDOWN CONTAGION

Government to suffer hefty losses in fuel taxes amidst the lockdown.

Mounting Losses

The Government is likely to suffer massive losses to the tune of ₹16,000cr ($2,130m) in excise duty on auto and jet fuel on the back of the 21-day lockdown as vehicles barring those being used for emergency and essential services stay off the roads.

 

States will also suffer a similar loss as they levy value added tax on petrol, diesel and jet fuel. [Livemint]

 

India stares at 136m job losses.

A "Deadly" Combination

An already slowing economy hit by the deadly coronavirus is a rather deadly concoction. 

 

Estimates based on National Sample Survey (NSS) and Periodic Labour Force Surveys (PLFS) data suggest that about 136m non-agricultural jobs are at immediate risk owing to the coronavirus outbreak. 

 

Industry body CII said that more than half of the tourism and hospitality industry can go sick with a possible loss of over 20m jobs if recovery in the industry stretches beyond October 2020. A deep dive into the matter here. [Livemint]

FIN.

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