Essar Group not going to repay PSU Bank Loans

On 16 October 2016 SUNDAY, it was announced that Ruias will sell entire stake in
Essar Oil to a Russian consortium Russian Energy Giant Rosneft, Netherlands-based
oil trading company Trafigura, and Russian fund United Capital Partners (UCP) for
US $ 13 Billion ( Rs 80,000 Crores ). This is the largest-ever single foreign direct
investment in India. The move would help the debt-laden Ruias, promoters of 'the
shipping-to-steel conglomerate Essar Group, retire over half its liabilities of around
Rs 90,000 crore, group director Prashant Ruia said.
While Commodities trader Trafigura, and Russian fund United Capital Partners (UCP)
would hold 24.5 % each, World Largest Publicly traded oil company `Rosneft will
hold 49 % in the consortium and Kesani Enterprises Co Ltd - Ruias would hold a 2%.
Economics Affairs Secretary - Shaktikanta Das said -
"...This deal proves the attractiveness of the Indian energy market to foreign investors
as India is one of the fastest growing fuel consuming economies. This deal is also a
significant step in the process of deleveraging the balance sheets of Indian
Corporates.."
Essar has already sold its Telecom Business to British Telecom Giant - Vodafone.
What Essar Oil sold
According to the deal , Essar would sell

1. Vadinar oil Refinary The refining capacity is estimated at 400,000 barrel-per

day
2. Fuel Retail Business sells fuels ( Petrol, Diesel etc ) through its 2,470 pumps.
3. Vadinar Port and other infra projects

On 20 October 2016 Thursday, it emerged that Essar Group is repaying Axis Bank,
ICICI Bank to get entire dues, after Essar Group raised money after selling 98% in
Essar Oil to Russian oil Giant Rosneft and two other investors for $ 13 Billion ( Rs
80,000 Crores ).
Essar Group owes Indian PSU Banks some Rs 1,50,000 Crores, while Axis Bank, ICICI
Bank are to get entire dues, there has been no report of any repayment of money
owed to PSU Banks. May be Narendra Modi government got their loans restructured
upto next 45 years, after coming to office.
Indian media has reported that Axis Bank, ICICI Bank are Indian lenders, the answer
is NO, they are not because both these banks are registered in Tax havens and have
75% foreign shareholding thanks to Modi government.
The Axis Banks is a subsidiary of Rothschild Banking Cartel.
Indian people must ask this question why Essar group has sold its assets and not any
other Big Business House..?
After Narendra Modi Government came to power, a large number of Big Business
Houses went for CORPORATE DEBT RESTRUCTURING,
Narendra Modi Government also restructured an outstanding Debt of Rs 4,30,000
Crores, owed by Discoms to PSU Banks.
More importantly Narendra Modi Government in order to further help BIG
BORROWERS not repay their Trillion Dollar Loans taken from PSU Banks has
converted Debt Recovery Tribunals and Appellate Tribunals into I-T Courts.. . The
idea is to portray Bad Debts.. as Tax Evasion, which can be appealed against in
Appellate Tribunals.
RBI has pumped Rs 60,000 Crores and LIC has pumped Rs 20,000 Crores to
recapitalize PSU Banks. A sum of Rs 70,000 Crores has been allocated each year, by
Narendra Modi Government to recapitalize PSU Banks.
Why did Essar Group sells its assets to repay its loans, when none of the Big Business
Houses, who owe Trillions havent sold their assets..?
The answer is Essar Group owed US $ 5 Billion to private Banks that have ties to
Rothschild Banking Cartel in Europe.
Unlike PSU Banks, they put enormous pressure on the group to repay their loans.
In such a scenario, Narendra Modi Government could not have come to the rescue of
Essar Group, so only way for Essar Group was to sell their Oil Business to repay loans
it owed to private Banks - Axis Bank and ICICI Bank.
Government owned PSU Banks are NOT going to get anything from Rs 80,000 Crores,
Essar group received from Russian consortium and Russias VTB Bank.
By allowing FDI from foreign companies, Narendra Modi Government is selling assets
owned to Indian people to foreign companies. While Narendra Modi Government has
taken a loan of Rs 12,00,000 Crores from World Bank ( owned by Rothschild Banking
Cartel in Europe ), he made no efforts to recover Rs 31,00,000 Crores owed to PSU
Banks by Big Business Houses.
Google

The Great Indian Bank Robbery

Banks including SBI take Bhushan Steel, Essar Steel to

NCLT over loans
Thu, Jun 22 2017. 10 16 PM IST
Banks refer Bhushan Steel, Essar Steel, Electrosteel Steels NCLT for
recovery of bad loans under the Insolvency and Bankruptcy Code
Mumbai: Lenders led by the State Bank of India (SBI) on Thursday decided to begin
insolvency proceedings against Bhushan Steel, Essar Steel and Electrosteel Steels by
referring them to the National Company Law Tribunal (NCLT) for recovery under the
Insolvency and Bankruptcy Code. The decision was taken at a marathon meeting
chaired by SBI.

While Bhushan Steel is in default of Rs44,478 crore to banks, Essar Steel owes
Rs37,284 crore and Electrosteel Steels Rs10,273.6 crore. These three borrowers are
among the 12 accounts identified by the Reserve Bank for immediate reference to
NCLT. These 12 accounts alone constitute a quarter of the over Rs8 trillion of non-
performing assets (NPAs).

ALSO READ: Resolve 55 bad loan cases in 6 months or face Insolvency and
Bankruptcy Code, RBI tells banks

Bankers, led by IDBI Bank, will be meeting on Friday to decide on Bhushan Power &
Steel which has been in default of Rs37,248 crore to the lenders. The development
couldnt be immediately confirmed with these companies. Besides these three
accounts, the other stressed borrowers include Amtek Auto, which is in default of
Rs14,074 crore, Alok Industries (Rs22,075 crore), Monnet Ispat (Rs12,115 crore) and
Lanco Infra (Rs44,364.6 crore). Era Infra (Rs10,065.4 crore), Jypaee Infratech
(Rs9,635 crore), ABG Shipyard (Rs6,953 crore) and Jyoti Structures (Rs5,165 crore)
were also among the identified stressed accounts, according to reports.

The meeting on these three companies was to finalise the application which banks
will be filing to NCLT, said a senior banker. Lenders want all the bankers in the
consortium to give their consent before registering the case with NCLT. Officials from
these three companies were also present at the meetings, bankers said.

On Saturday, Lanco Infratech said the Reserve Bank of India (RBI) has directed its
lead banker IDBI Bank to initiate insolvency procedure for the company. Once a case
is referred to NCLT, there is a 180-day time line to decide on a resolution plan though
90 days can be given in addition. If a plan is not decided, then the company will go
into liquidation.

The internal advisory committee (IAC) of the RBI after its meeting on 13 June had
recommended 12 accounts totalling about 25% of the gross NPAs of the banking
system for immediate reference under Insolvency and Bankruptcy Code. These 12
accounts referred by the RBI have an exposure of more than Rs5,000 crore each, with
60% or more classified as bad loans by banks as of March 2016.

Banking systems total NPAs stand at over Rs8 trillion of which Rs6 trillion are with
public sector banks. Meanwhile, RBI on Thursday expanded the oversight committee
by appointing three more members to the high-level panel that will vet the process to
resolve mounting bad loans bogging down the banking sector. Former chief vigilance
commissioner Pradeep Kumar will head the now five-member panel that will work
through multiple benches, RBI said in a statement.

The expansion follows promulgation of the Banking Regulation (Amendment)

Ordinance 2017 last month. The ordinance had outlined the reconstitution of the
overseeing committee (OC) with an expanded mandate.

The Reserve Bank has since brought the OC under its aegis. The OC will, for the
present, have five members, including a chairman, and will work through multiple
benches as may be necessary and constituted by the chairman to opine on the cases
referred to it by the banks, it said.

Banks get 3% of loans repaid from Essar Oil deal; Essar Steel
debt still in limbo
Bankers to Essar Oil will get Rs 4,000 crore from Rosneft deal of Rs 82,740
crore (USD 12.9 billion) which will reduce Essars Group debt by Rs 70,000
crore
Bankers to Essar Oil will get Rs 4,000 crore from the Rosneft deal of Rs 82,740 crore
(USD 12.9 billion), which will reduce Essar Group's debt by Rs 70,000 crore.

However, lenders hoping to receive part of the proceeds of the Essar Oil deal toward
servicing of Essar Steels loans, have gone for a toss.

Debt-laden Essar group on Monday announced the sale conclusion of its crown jewel
Essar Oil, including the captive port, power and retail assets, to Moscow-controlled oil
giant Rosneft and a consortium of investors (Trafigura Group and United Capital
Partners) for USD 12.9 billion, making it Indias "largest FDI" deal.
However, both Essar Oil and Rosneft refused to declare what part of the proceeds
would come through equity and debt. Essar Oil was about 25 percent of the groups
portfolio.

Signed on October 15, 2016, in the presence of Prime Minister Narendra Modi and
Russian President Vladimir Putin at Goa on the sidelines of the BRICS summit, the
deal was held backed by domestic lenders, including State Bank of India, ICICI Bank,
IDBI Bank, Axis Bank and Yes Bank, which have a cumulative exposure pegged at
about Rs 1.4 lakh crore to the Group.

This means, Rs 4,000 crore is tantamount to 2.85 percent of the total debt owed by
the Group to lenders.

Of the Rs 4,000 crore, Life Insurance Corporation of India (LIC) will get around Rs
800 crore as it was a key player in delaying the deal. LIC has some exposure to Essar
Power and Port and not to Essar Oil but its conditioned on the deal that it must repay
its dues.

It is said that bankers have had to close the deal on largely the original terms and
conditions, and that they could not force Essar to use the sale proceeds to pay off
Essar Steels debts, which stands at about Rs 44,000 crore, of which Rs 31,671 crore
has turned non-performing assets (NPAs).

Essar Steel case is one of the 12 larger defaulting firms referred by the Reserve Bank
of India (RBI)to be admitted at the National Company Law Tribunal under the
Insolvency and Bankruptcy proceedings.

Calling it the single-largest deleveraging ever in Indian corporate history, Essar Group
director Prashant Ruia said, "The proceeds from the deal would be used to reduce the
groups debt by half of Rs 70,000 crore at an operating level and at the holding
company - Essar Global - level, the best of the debt is coming downMajority of the
debt exposure would be transferred to the new owner now that the deal is closed."

Chanda Kochhar, MD & CEO, ICICI Bank said, I am delighted to note that the entire
ecosystem including the government, regulators, banks and various authorities
worked together to complete the deal which is also the largest ever foreign
acquisition of an Indian company. The deal also underscores the keenness of foreign
investors to enter India, the fastest growing large economy in the world. This
transaction reduces ICICI Banks exposure to the Essar Group by about 50 percent.
According to Ruia, "While around USD 5 billion (Rs 32,000 crore, of which Rs 6500
crore / USD 1 billion is working capital loans) worth of Essar Oils debt will be taken
over by Rosneft the new owner as domestic lenders led by SBI, ICICI Bank, Axis Bank
and IDBI Bank have elected to stay with the Russian company. He added that the
Group will also clear the nearly USD 3 billion (Rs 19,200 crore) dues to Iran for past
crude purchase.

Both Ruia and the lenders did not reveal the conditions on which the deal was cleared
by the bankers.

New Essar Oil

The new Board would include Tony Fountain as Chairman of Essar Oil and non-
executive chairman as UCP nominee, and also include an LIC nominee till its interests
are repaid.

B Anand has been appointed as the new CEO of Essar Oil.

As per the deal, Essar Oils 98.26 percent is held by its controlling shareholders Essar
Energy Holdings and Oil Bidco Mauritius. While Rosneft, through its arm Petrol
Complex acquires 49.13 percent, Trafigura-UCP consortium (via Kesani Enterprises
Co) takes an equal stake.

Rosnefts stake in Essar Oil includes 20-million tonne Vadinar refinery in Gujarat
(Indias second largest private refinery), a captive port (58 mt) and a power plant
(1,010 mw multi-fuel unit) and over 3,500 petrol pumps.

Essars promoters Ruias maintain 2 percent holding in the consortium of Trafigure

and UCP, which cumulatively hold Rs 49.13 percent.

That is what the consortium wanted and no immediate plans to change the
structure, Ruia said.

The remaining 1.74 percent will be held by minority shareholders who refused to
tender their shares in the delisting of Essar Oil last February.

Quoting business magnate John D. Rockefeller, CEO of Standard Oil Company, on

perseverance, Ruia said, "Over last six years, the group has done a capital expenditure
of over Rs 1.2 lakh crore across entire core sector businesses. With that over, we are
poised to embark on the next phase of our journey. All our companies have significant
growth prospects...We are refocusing our energy across our portfolio of businesses."

Rosneft has also signed a non-compete agreement with Essar Oil, which for an
undisclosed period would not be able to open any refinery, petro station or any such
business with similar interest.
The new Essar Oil has plans to be on the retail side and asked its management to
bring forth an asset management plan soon.

ICICI, Axis, StanChart get back $2.5 bn of Essar loans

Mumbai, Oct 22:
Within days of Essar Group signing a mega USD 12.9-billion asset sale in its oil
business, three top lenders ICICI Bank, Axis Bank and StanChart have got back
an estimated USD 2.5 billion as part of the first payment for their debt exposure to
the Ruias-led conglomerate. The two Indian lenders which together had an
exposure of USD 1.5 billion will get back nearly half of their money or about USD
770 million in cash while further USD 750 million of debt will get transferred to
Rosneft-led consortium and Essars ports and other businesses, as per the terms
agreed upon by them.
Out of the total cash component, nearly USD 350 million was paid in cash to the two
Indian banks last night, which together with interest payout of about USD 100 million
takes their total collection from Essar to about USD 450 million, banking sources said.
Between the two Indian lenders, ICICI Banks share is nearly three-fourths while that
of Axis Bank is about one-fourth in the total exposure as well as repayments.
In the case of StanChart, whose total exposure was much higher at over USD 3.3
billion, the bank has decided to opt for a larger cash component of about USD 2.1
billion for repayment of its loans.
Sources said StanChart got back the entire cash component at one go last night while
nearly USD 400 million of its debt will get transferred to ports and other businesses
of the Essar Group. Besides, it has decided to write off nearly USD 850 million of its
exposure.
Payments totalling about USD 2.5 billion were made to the three lenders last night as
part of the first tranche of the repayment schedule while payout of the remaining
cash component (over USD 300 million) to the two Indian banks will happen soon,
sources said.
The loans totalling about USD 1.2 billion will get transferred to the Rosneft-led
consortium, which has acquired 98 per cent stake in Essar Oil, and to other
businesses of Essar.
Sources said the transferred loans will be backed by sufficient collaterals while the
Indian lenders decision to opt for only half cash component showed their confidence
in Rosnefts commitment to the India growth story and in the future prospects of
ports and other infrastructure sectors.
No immediate comments could be obtained from the Essar Group and the three
banks.
However, public sector banks are yet to get any repayment of their loans as their
exposure has mainly been to Essar Steel. In the case of the two private sector Indian
lenders and StanChart, the payment has been made towards their exposure to the oil
business and global holding company of the Ruias-led group, sources said.
The money from the deal (Essar Oil buyers Rosneft) will mainly go for repaying
oil debt. A majority of the lenders have exposure to Essar Steel and so, they will not
get any money, said a public sector banker who has a large exposure to Essar Steel.
In the largest inflow of foreign direct investment, Russias state-controlled oil giant
Rosneft and its partners on October 15 acquired Essar Oil, Indias second-biggest
private oil firm, in an all-cash deal valued at about USD 13 billion.
Rosneft has bought a 49 per cent stake in Essar Oils refinery, port and petrol pumps
while the Netherlandsbased Trafigura Group Pte, one of the worlds biggest
commodity trading companies, and Russian investment fund United Capital Partners
split another 49 per cent equity equally.
The remaining 2 per cent will be held by minority shareholders after delisting of
Essar Oil.
The Essar Group had said it would utilise significant portion of the deal proceeds for
debt reduction and expected the group debt to come down by about 50 per cent.
The group, one of Indias largest but among the most-indebted conglomerates, had a
total debt of about Rs. 88,000 crore (over USD 13 billion).

Three banks get back $2.5 billion from Essar group

ICICI Bank and Axis Bank get close to $450 million;
Stanchart gets $ 2.1 billion but writes off $ 850 million.

A week after the Essar group signed a mega $12.9-billion deal to sell
Essar Oil and Vadinar Port to Rosneft of Russia, three banks ICICI
Bank, Axis Bank and Standard Chartered Bank have received over
$ 2.5 billion (around Rs 16,750 crore) from the Essar group towards
repayment of loans to Essar Global.
However, Standard Chartered Bank which received a major chunk of
the money $ 2.1 billion has made a write-off of $850 million as
part of the repayment plan, a top banking source said.

ICICI Bank and Axis which have an exposure of over $ 1.5 billion will
get back around $ 775 million, or half of their exposure, from the
Essar group. Of this, these two banks have already received around $
375 million 50 per cent of $ 775 million and interest amount
of $100 million on Friday. ICICI Bank has received 75 per cent of the
cash and Axis Bank got the remaining 25 per cent.

According to banker who is in the know of the development, 20 per

cent of the remaining amount of $ 775 million will go to Rosneft and
30 per cent to ports and other businesses of the Essar group.

The remaining $775 million of the $1.5 billion exposure of ICICI

Bank and Axis will be given back after the deal is consummated in
January 2017. Stanchart has the biggest exposure of $ 3.35 billion in
Essar Global. The two Indian lenders have not made any write-offs
as part of the deal.

The debt transferred to Rosneft will be backed by sufficient

collaterals while the Indian lenders decision to opt for only half
cash component showed their confidence in Rosnefts commitment
to its India plan, he said.

This deal (Essar-Rosneft) is a significant step in the process of

deleveraging the balance sheets of Indian corporates. ICICI Bank has
been closely working with various companies including the Essar
Group to help them deleverage their stressed balance sheets. We
will continue working towards this objective with others, ICICI
Bank MD and CEO Chanda Kochhar had said last week.

The Essar-Rosneft deal could result in the largest case of bad loan
resolution, salvaging 10 per cent of the non- performing assets
(NPAs) of the banking system, analysts and bankers said.

Essar Oil (EOL) promoters sold 98 per cent stake in the company to
Rosneft, Trafigura and United Capital Partners at an enterprise value
of Rs 73,000 crore while the capital employed was Rs 33,000 crore.
The promoters have also sold their entire stake in Vadinar Port to
the same investors for Rs 13,300 crore.

Public sector banks have not received any money as their exposure
is mainly in Essar Steel. Resolution of Essars steel and power debt is
expected to come up in the next stage after the deal is approved.
Essar group has a total debt of close to $17 billion. Essar Steel is in
the default category of many banks.

Aggregate NPAs of the banking sector are now at Rs 650,000 crore

(8.6 per cent of loans) as of June 2016 and an additional Rs 260,000
crore (3.5 per cent) are restructured. However, we estimate that
another 4.5 per cent (Rs 330,000 crore) of stressed loans are still to
be recognised as NPA/ restructured, Credit Suisse said in its India
corporate health tracker report.

For all the latest Business News, download Indian Express App

With Rs 45,000 cr in debt, Essar Steel asks for

Rs 1000 cr loan; see what the banks did
Lenders to Essar Steel have asked the resolution
professional for information to substantiate the
companys demand for Rs 1,000 crore of fresh working
capital loans.
October 11, 2017 6:18 AM
Lenders to Essar Steel have asked the resolution professional (RP)
for information to substantiate the companys demand for Rs 1,000
crore of fresh working capital loans, senior bankers told FE. The
company already owes banks close to Rs 45,000 crore, and the Essar
Group Rs 1.17 lakh crore.
Bankers said the committee of creditors believes the company can
manage without the additional funds. While the RP has asked us to
consider the proposal, we have asked for more information that
would explain the need for more credit, a banker said.
The companys management had asserted in the Gujarat High Court
earlier this year an 80% capacity utilisation of the plant had led to a
42% increase in the Ebitda (earnings before interest, tax,
depreciation and amortisation) in FY17. Prices of steel have
rebounded smartly from their lows; currently they are ruling at
$600 per tonne compared with $494 per tonne in November 2016.
An email to Essar Steel requesting a comment remained
unanswered.
In August, the National Company Law Tribunal had appointed Satish
Kumar Gupta of Alvarez and Marsal, India, as the interim resolution
professional (IRP). The IRP has since been working on Essars debt
restructuring plan on behalf of both State Bank of India (SBI) and
Standard Chartered Bank. Of the `45,000 crore Essar Steel owes to
lenders, Rs 31,671 crore was non-performing as on March 31, 2016.
While SBI leads a consortium of 22 lenders that account for 93% of
the companys debt, Essar Steel also owes around Rs 3,700 crore to
Standard Chartered Bank. Essar Steels Mauritius-based subsidiary
had borrowed from Standard Chartered, for which Essar Steels
promoters were guarantors.
Banks have been unwilling to give fresh loans to companies against
which insolvency petitions have been admitted. For instance, FE had
recently reported that lenders to Bhushan Steel were not keen to
sanction a fresh loan of Rs 500 crore.
Most private banks have sold their Essar Steel exposure to asset
reconstruction companies, taking a haircut of more than 50%; most
PSU banks have declared Essar Steel a non-performing asset.
Last year, Essar Steel had requested banks to convert Rs 12,200
crore of loans into preference capital and equity shares. While Rs
9,000 crore was sought to be converted into preference shares, to be
redeemed after 12-18 years, the company requested that the
remaining `3,200 crore be converted into common equity. For the
balance `31, 800 crore, the company has sought a prolonged
repayment period.

NCLT route cannot be used effectively in all NPA cases:

SBI MD
Fri, Oct 13 2017
State Bank of Indias MD P.K. Gupta says the banks have to use what
is the best mechanism in each particular case and NCLT cannot be
the solution for all cases.
New Delhi: State Bank of India (SBI) managing director P.K. Gupta
on Friday said banks should use the best available mechanism to
recover bad loans and the National Company Law Tribunal (NCLT)
route cannot be used effectively in all cases of non-performing
assets (NPA).

Indicating that one size fits all approach may not work in all cases,
he said that basically, the NCLT is one of the resolution mechanisms.

A lot of resolution mechanisms already are therethe RBI scheme,

an oversight committee, Gupta told reporters on the sidelines of a
conference organised by the Pension Fund Regulatory and
Development Authority (PFRDA) here.

The banks have to use what is the best mechanism in each

particular case. The NCLT cannot be the solution for all cases.

The banks that find it tough to recover loans from borrowers can
refer such cases to the NCLT as part of insolvency proceedings.

A number of banks, including State Bank of India (SBI), Punjab

National Bank (PNB), Bank of Baroda and IDBI Bank, have initiated
proceedings against defaulters by moving the NCLT to recover their
dues.

The banking sector is saddled with NPAs of over Rs8 trillion, of

which Rs6 trillion is with public sector banks (PSBs).

The Reserve Bank of India (RBI) has identified 12 large NPA

accounts constituting 25% or about Rs2 trillion of the total pie.
Essar Steel, Bhushan Steel, Bhushan Steel and Power, Electrosteel
Steel, Lanco Infratech, Alok Industries, Jyoti Structures and Jaypee
Infratech are among the big names that are facing NCLT cases.