The National Company Law Tribunal (NCLT) Mumbai has admitted a Corporate Insolvency Resolution Process (CIRP) petition against SU Toll Road Private Limited, a wholly-owned subsidiary of Reliance Infrastructure . The petition, filed by State Bank of India (SBI), cited a default amount of ₹358.70 crore, including interest.

Project Details and Default

SU Toll Road Private Limited operates a toll road project on the Salem-Ulundurpet section of National Highway 68 in Tamil Nadu. The project, awarded on a Build, Operate and Transfer (BOT) basis, has a concession validity until January 14, 2033. According to the NCLT order, the company defaulted on loan repayments starting June 1, 2023, leading to the accounts being classified as Non-Performing Assets (NPAs) in August 2023.

NCLT's Decision

The NCLT, after careful consideration of the arguments presented by both parties, decided to admit the insolvency petition. The tribunal appointed Sanjay Kumar Mishra as the Interim Resolution Professional (IRP) and declared a moratorium on all proceedings against the company.

Key Points from the NCLT Order

1. Debt Verification: The NCLT verified the existence of financial debt and default, satisfying itself that the default amount exceeded the minimum threshold of ₹1 crore as prescribed under the Insolvency and Bankruptcy Code (IBC).

2. Moratorium: As per Section 14 of the IBC, a moratorium has been declared, prohibiting the institution or continuation of suits, transferring of assets, or any recovery actions against the corporate debtor.

3. IRP Appointment: Mr. Sanjay Kumar Mishra has been appointed as the IRP to take charge of the company's assets and manage its operations as a going concern.

4. Public Announcement: The IRP is directed to make a public announcement for the initiation of CIRP and call for the submission of claims.

Reliance Infrastructure's Statement

Reliance Infrastructure, in its statement, mentioned that the company's entire exposure to SU Toll Road Private Limited is already provided for, and no further impact is expected from this development.

Implications and Next Steps

The admission of the insolvency petition marks the beginning of the resolution process for SU Toll Road Private Limited. The IRP will now take control of the company's assets and invite claims from creditors. The future of the toll road project and its operations will depend on the outcome of the CIRP, which aims to find a resolution that balances the interests of all stakeholders involved.

This case highlights the ongoing challenges in the infrastructure sector and the use of the insolvency resolution process to address financial distress in large-scale projects. As the CIRP progresses, it will be closely watched by industry observers for its potential implications on other infrastructure projects and the broader sector.

Reliance Infrastructure Limited (RInfra) has announced the complete utilization of Rs 978.60 crore raised through its preferential warrant issue, according to the company's monitoring agency report for the quarter ended June 30. The report, submitted by Infomerics Valuation and Rating Limited, confirms that the funds were used in line with the stated objectives, with no deviations observed.

Warrant Issue Details

RInfra had initially issued 12.56 crore warrants as part of a larger Rs 3,014.40 crore preferential issue. The company has received Rs 978.60 crore to date, representing a portion of the total warrant issue.

Fund Utilization Breakdown

The utilization of the Rs 978.60 crore was as follows:

Key Developments

• Investment in Subsidiary: During the quarter, RInfra invested Rs 225.00 crore in its subsidiary, Reliance Defence Limited, through cumulative compulsory convertible debentures.

• Equity Allotment: The company allotted 1.25 crore equity shares to Risee Infinity Private Limited, a promoter entity, for Rs 300.00 crore.

Monitoring Agency's Observations

Infomerics Valuation and Rating Limited, acting as the monitoring agency, confirmed that:

1. All proceeds were utilized according to the offer document.
2. No unutilized funds remain in escrow accounts.
3. The amount used for general corporate purposes does not exceed 25% of the gross proceeds from the preferential issue.

Management Commentary

The company stated that a substantial portion of the issue proceeds would be directed towards expanding its presence in the defence sector and setting up new business opportunities. This strategy aligns with the 'Make in India' and 'Viksit Bharat' visions by strengthening domestic production capabilities and reducing import reliance.

Conclusion

Reliance Infrastructure's full utilization of the received warrant proceeds demonstrates the company's commitment to its stated objectives. The investments in its defence subsidiary and the focus on business expansion indicate RInfra's strategic moves to strengthen its position in the infrastructure and defence sectors.

Investors and stakeholders can take note of the company's adherence to its funding plans and the transparent reporting of fund utilization, as verified by the independent monitoring agency.