Non-banking financial services firm Srei has filed bankruptcy petitions against three of four companies that held and sold Viom Networks shares on its behalf.
The applications for insolvency against Right Tower, Resurgent Infratel and Confident Solar came up for hearing on Monday and were admitted by National Company Law Tribunal as legitimate cases. The cases will be heard on October 24, when these companies and Srei InfrastructureBSE 3.19 % Finance will need to present a resolution plan. A person close to the developments said an insolvency application had also been filed for the fourth company, Optimum Infratel, but ET could not independently verify this.
The Srei group was represented by local boutique law firm MKB & Associates, as per a listing on the website of the tribunal. The law firm did not comment. The Srei group did not respond to ET’s queries till press time Tuesday.
Listed Srei Infra held 11% of Viom directly while the remaining 7% was held through the four entities. These four have an outstanding debt higher than Rs 500 crore with accumulated interest.
Of the four, three are investee companies of Srei Alternative Investment Managers, a 100% arm of Srei Infra. The fourth, Confident Solar, is an indirect arm of Opulent Venture Capital Trust, also formed by the group. The three companies are 97.99%-owned by Prithvi Infrastructure Fund and 1.99% by Infra Construction Fund to which Srei Infrastructure is also a contributor. Other shareholders of the funds aren’t known. The companies were created with an equity capital of Rs 1lakh from the funds.
In August, ET reported that these four companies were left with a loss of Rs 440 crore at the end of the financial year that ended in March 2016. The companies had no other assets or cash flow to service loans.
Therefore, after sale of Viom shares, they cannot repay the outstanding debt. The companies borrowed money from Srei Infra, which upped the loan amount each year so companies could pay interest on the loans. Over five years, four companies paid Rs 570 crore as interest on the original loans of Rs 1,005 crore. In an earlier email to ET, Srei Infra acknowledged receiving interest during these years.
In October 2015, Tata group and Srei, with a clutch of private equity investors, sold a 51% stake in Viom to ATC for Rs 7,639 crore. Srei exited entirely for Rs 2,931 crore, also giving up management control, while Tatas and some financial investors partially monetised stake.
Source: Economic Times