Lenders object to Altico CEO Sanjay Grewal’s resignation

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Published: September 19, 2019 2:55:30 AM

The consortium of lenders to Altico had met on Monday to discuss the ongoing crisis in the NBFC. While there have been reports of appointment of a process adviser, bankers have told the company that such appointments cannot be made without their consent.

Altico, CEO, Sanjay Grewal, resignation, NBFC, ICA, Abu Dhabi Investment Council, industry newsAltico CEO Sanjay Grewal

By Shubhra Tandon & Mitali Salian

Lenders to crisis-ridden Altico Capital India are understood to have objected to the resignation of Sanjay Grewal, chief executive officer of the wholesale non-deposit taking non-banking finance company (NBFC). Grewal expressed his intention to resign at a lenders’ meeting, called by the NBFC on Monday to apprise them of the situation, sources told FE. However, lenders are understood to have objected, saying the continuity in the management was required to tackle the crisis at hand.

Expressing their discontent over the manner in which affairs at the NBFC have been handled so far, a banking source aware of the development told FE, “Altico has been told that it cannot make any debt repayment with existing cash flows unless expressly allowed by the banks.”

The consortium of lenders to Altico had met on Monday to discuss the ongoing crisis in the NBFC. While there have been reports of appointment of a process adviser, bankers have told the company that such appointments cannot be made without their consent.

Further discussions on signing of an inter-creditor agreement (ICA) and any potential resolution proposals are expected to be held at future meetings, bankers said. Clearwater Capital Partners, Varde Partners and Abu Dhabi Investment Council are investors in the NBFC.
Altico Capital had defaulted on interest payment to the tune of Rs 19.97 crore on a Rs 340-crore external commercial borrowing by Mashreq Bank on September 12.

The company’s total borrowing from banks and financial institutions stood at Rs 4,361.55 crore as on September 12. Meanwhile, data from Value Research show that mutual funds have an exposure of Rs 537.67 crore in Altico Capital India as on August 2019. UTI Mutual Fund has an investment of `333.84 crore in Altico across seven debt schemes, while Reliance Mutual Fund has an investment of Rs 203.83 crore, show the data from Value Research. Both the MFs decided to create a segregated portfolio in their respective funds which has an exposure to debt instruments issued by Altico Capital India.

According to Emkay Global Financial Services, Altico’s loan book of Rs 6,900 crore, as of June 2019, has exposure to real estate developers, where in terms of life cycle, 31% of the loan book was attributable to early-stage funding of projects and about 70% of the loan book was under moratorium.

Along with two other entities, including KKR, Altico has a combined exposure of Rs 900-1,000 crore to SARE Homes, promoted by London-based Duet Group, which was facing severe cash crunch due to unsold inventory. Further, Altico had an initial exposure of Rs 430 crore to Supertech in the NCR, and more recently infused Rs 100 crore into Pharande Group, a struggling developer based in Pune.

The day after the company informed exchanges of a default, India Ratings and Research downgraded the company’s long-term and short-term issuer ratings to ‘IND D’ from ‘IND A+’ and ‘IND A1’, respectively.

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