Business Today – August 25, 2019

THE BUZZ

ANDHRA PRADESH

SLOWDOWN

IMPACTS

INVESTMENT

TOO

THE PROLONGED slowdown in the domestic automobile

sector which shows no signs of abating has started to

impact investment and expansion plans of companies.

Market leader Maruti Suzuki, which registered dismal

financial results in the first quarter of FY2020, has

reportedly put on hold plans to expand capacity at

the Gujarat factory. While it was initially planned as

a 1.5 million unit per annum factory, the company

may not expand it beyond the existing 750,000 units

at all. Similarly, many component makers have put

investments on hold due to the prevailing uncertainty

over electrification in the sector. While the tarmac

disappeared long time ago, the sector is now fast

running out of gas as well.-Sumant Banerji

INVESTORS WAIT & WATCH

THE CASH-STRAPPED Andhra

Pradesh under new chief minister

Y S Jagan Mohan Reddy is keeping

investors in a wait and watch mode

with clarity yet to emerge on the

way ahead on infrastructure, renew-

able energy and education. It has

already cancelled construction work

orders issued prior to April 1 but not

grounded so far. That has, in turn,

impacted several companies such

as NCC and L&T, among others.

It has, for instance, cancelled work

orders worth around `6,100 crore

for NCC alone. In solar and wind

energy, the government wants to

re-negotiate power purchase agree-

ments (PPAs) already approved

by the Andhra Pradesh Electricity

Regulatory Commission (APERC),

which the Andhra High Court has

now stayed till August 22. The

state wants to withdraw the other

PPAs (around 21) that are pending

APERC approval. In education,

the move is now on to re-fix fees

charged by private educational

institutions.-E Kumar Sharma

AUTOMOBILES

Andhra Pradesh
Chief Minister Y.S.
Jagan Mohan Reddy

AMID TALK about recent amend-

ments in the Insolvency and Bank-

ruptcy Code, what got missed was

the fight over authority between the

judiciary and the government, an

issue on which the latter seems to

have prevailed. The amendments

have overturned two important orders

passed by the National Companies

Law Appellate Tribunal (NCLAT) in the

Essar Steel insolvency case. The posi-

tion that emerged from the orders was

that financial and operational creditors

must be given similar treatment, which

means both taking similar haircuts,

and that the Committee of Creditors

(CoC) has no role in distribution of

proceeds of the resolution plan among

financial and operational creditors.

The amendments proposed by the

government contradict the NCLAT po-

sitions on both counts. It says the CoC

has the final say in commercial consid-

eration in the manner of distribution

proposed in the resolution plan, and

that it can take into account the order

of priority among creditors, including

the priority and value of the security

interest of a secured creditor.

• Dipak Mondal

IBC AMENDMENTS

Govt Prevails

Over Judiciary

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