Government faces huge blow from Anil Ambani’s company! More than half of LIC and EPFO’s money will be lost
New Delhi: The way has been cleared for the sale of Anil Ambani’s company Reliance Capital, which is deeply in debt. RBI has also approved the resolution plan of Hinduja Group company IndusInd International Holdings Limited (IIHL) for Reliance Capital. Also, the central bank has approved the plan to include five representatives of Hinduja Group as directors on the board of Reliance Capital. With this, the way has been cleared for the sale of this company which was once a milch cow for Anil Ambani. Hinduja Group had made the highest bid of Rs 9,650 crore to buy Reliance Capital in the second round of auction in April. Considering Hinduja’s offer and Reliance’s cash balance, recovery of around Rs 10,000 crore is expected. This means that the banks giving loans to the company are sure to suffer a huge loss. These also include LIC and EPFO.
Apart from being a non-banking finance company, Reliance Capital was also the holding company for Anil Ambani’s financial services business. Reliance Capital has about 20 financial services companies. These include securities broking, insurance and an ARC. RBI had dissolved the board of Reliance Capital on November 30, 2021 and initiated insolvency proceedings against it. The central bank had appointed Nageshwar Rao Y as its administrator. In the first round, Torrent Investments had made the highest bid of Rs 8,640 crore for Reliance Capital. Hinduja Group had made the highest bid in the second round. But Torrent challenged this.
LIC and EPFO loan
Currently this matter is in the Supreme Court and hence NCLT has not approved the resolution plan of IIHL. This case is to be heard in the Supreme Court next week. But the banks that gave loans to Reliance Capital are sure to suffer a huge loss. They can get only 43 percent of their loan. Hinduja Group has made a bid of Rs 9,650 crore for the company. Also the company has a cash balance of about Rs 400 crore. Considering Hinduja’s offer and the company’s cash balance, only Rs 10,050 crore is expected to be recovered.
In September 2021, Reliance Capital had told its shareholders that the company had a debt of more than Rs 40,000 crore. The administrator has verified the claims of financial creditors amounting to Rs 23,666 crore. In this way, lenders will be able to get only 43 percent of their total loan. LIC has a debt of about Rs 3,400 crore on Reliance Capital. Similarly, EPFO had invested Rs 2,500 crore in the bond program of Reliance Capital. In this way, LIC is expected to get around Rs 1,460 crore and around Rs 1,075 crore.
