Hinduja Group, which acquired Anil Ambani-promoted Reliance Capital, has submitted an application to the National Company Law Tribunal (NCLT) seeking more time to make the final payments to the lenders.
The group cited delays in obtaining approval from the Department for Promotion of Industry and Internal Trade for foreign investment as the reason for the request. This process of approval has caused some delay, and the delay is purely on account of unforeseen developments, said the application.
IndusInd International Holdings (IIHL) , a firm of the Hinduja Group, won the bid for Reliance Capital in a debt resolution deal worth ₹9,850 crore in October 2023. IIHL has received almost all necessary approvals, including the crucial insurance regulator’s approval, to conclude the acquisition. The original deadline for completing Reliance Capital’s insolvency proceedings and making the payment was May 27.
“The difficulties that have resulted in a slight delay are relatable to the approval from the Department for Promotion of Industry and Internal Trade. The interplay between the Rules and the FDI Policy has resulted in a conundrum, and it was only during the meeting of the representatives of the applicant with the RBI held on April 29, 2024, that the applicants were advised to obtain approval,” IIHL said in an application.
It stated the IIHL is vigorously pursuing this with the Reserve Bank of India and, in fact, the RBI’s Foreign Exchange Department, on June 8, 2024, sent an email with queries and seeking clarification, which has been duly answered.
Reliance Capital creditors alleged that IIHL’s failure to seek the required approvals cannot and ought not to be borne by the Corporate Debtor and its financial creditors. The delay in receipt of the approval is solely on account of IIHL’s conduct.
IIHJL, in the application, claimed that obtaining all the approvals is not its sole responsibility because most of the approvals are required to be applied for either by the administrator or through the operating subsidiary or associate companies of the Corporate Debtor and, therefore, not in the hands of the group.
Regarding the equity infusion aggregating to ₹2,750 crore, the application stated that the group has already demonstrated its bona fides by submitting a certificate from its statutory auditors, D & G Associates LLP, certifying the group’s ability to meet its obligation of infusing equity capital on demand. “The certificate clearly states that funds to the tune of $300 million (approximately ₹2,500 crore) have been earmarked for equity participation. This was also supported by a resolution passed by the board of directors of the applicant.”
