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DHMC to address job-skill mismatch in PHL hotel industry

By Arra B. Francia, Reporter
MANAGEMENT COLLEGE LARS ELTVIK has opened, managed, and taught in several schools in different parts of the world — from Chile, Dubai, Finland, Brazil, and more — in the past three decades. Now, he’s bringing his knowledge and expertise in the hotel industry to the Philippines, this time as the managing director of the Dusit Hospitality Management College (DHMC) at The Fort in Taguig City.
The 51-year old executive was tapped to open the Dusit Thani Group’s first hotel management school in the Philippines back in 2015. Among his first impressions was the popularity of hospitality education in the country, what with more than 1,000 schools licensed to train students in the industry.
“The competition here is much higher and there are some very good schools, some of them also with good international linkages. We are coming in to the premium segment of hotel and tourism management schools, really aiming to bring the top international partners,” Mr. Eltvik told BusinessWorld in a recent interview.
DHMC has partnered with Switzerland-based École hôtelière de Lausanne for the Bachelor of Science degree in Hospitality Management. To ensure high standards in cuisine, the school has engaged Institut Paul Bocuse, named after the renowned French chef.
Students at the DHMC will experience on-the-job training as the college stands on the first nine floors of the dusitD2 Hotel The Fort Manila. The 27-storey tower offers 125 rooms for the hotel component, and 108 serviced residences.
The tower also houses five restaurants, providing students with the necessary facilities for professional advancements in culinary work. Students are able to witness a hotel’s day-to-day operations, allowing them to learn through hands-on experience.
Mr. Eltvik said this will help address the job-skill mismatch in the industry.
“What we find, when we talk to industry leaders and how they feel when they recruit young people, the challenges are that what they learned are not updated. There’s a gap with what they learned in school… This unique education concept will be very important to bridge this gap between operations,” he said.
Mr. Eltvik noted that with this kind of training, students would be qualified to enter management trainee or supervisory roles by the time they leave DHMC.
For this school year, DHMC will welcome around 12 to 20 students. While this is still a small group, Mr. Eltvik said they are happy with their recruitment for the year, noting that the focus is always on quality.
Since the group has yet to finish construction of the dusitD2 Hotel, Mr. Eltvik said they will first hold classes at the Dusit Thani Manila in Makati City.
“We’re fitting out learning kitchens here are Dusit Thani. We’re fortunate that the space is available,” he said, adding the DHMC facility will be ready by the second semester of this year.
The Dusit Thani Group is banking on the expected influx of tourists here in the following years.
The Department of Tourism reported last July that tourist arrivals hit an all-time high of 3.7 million visitors in the first half of 2018, 10.4% higher from a year ago. The tourism department earlier projected that international tourist arrivals could hit 7.4 million this year, higher than the 6.6 million seen in 2017.
With this in mind, Mr. Eltvik said the country needs more operators that could not only handle the growing number of tourists but also provide quality that’s at par with international hotels.
“These days people travel more often and more widely, so when an international traveler comes to the Philippines and they stay in a hotel that has a certain standard, they have the same expectation as if they are going to Bali or Hawaii or Paris. I think we have a great opportunity in the Philippines to strive to have the same standards here,” he explained.

SMC says Bulacan airport project to generate one million jobs

SAN MIGUEL Corporation (SMC) on Monday said its proposed P736-billion New Manila International Airport in Bulacan will generate as much as one million jobs in its construction phase.
In a statement on Monday, SMC President and Chief Operating Officer Ramon S. Ang said the company will hire “the best workers from here and abroad,” once it secures the go-signal for the airport construction.
“It’s a massive undertaking. We will need Filipino talents in engineering, construction, hospitality, and airport-related services. Hopefully, this will give many of our OFWs countrymen a reason to come home, be with their families, and at the same time help in building a better future for our nation,” Mr. Ang was quoted as saying.
SMC is proposing to build an airport that will be built on a 2,500-hectare property with up to six runways and modern terminals, and to be configured to handle about 100 million passengers a year.
The project was approved by the NEDA Board — chaired by President Rodrigo R. Duterte — in April, subject to the condition of another approval round for the concession agreement to address concerns about the proponent’s financial and technical capability to deliver.
SMC has already submitted the revised concession agreement along with the risk allocation matrix. The Department of Finance and NEDA (National Economic and Development Authority) forwarded their comments earlier this month. SMC is now considering the comments.
The Department of Transportation (DoTr) will then start negotiations with SMC to finalize the draft concession agreement which will be submitted to the NEDA-Investment Coordination Council, and will jump-start the Swiss Challenge.
Under a Swiss challenge, third parties can submit competing offers but the original proponent will be given the right to match these offers.
Last week, the DoTr said two airport projects are now being prioritized — the construction of an airport in Bulacan and the development of an airport in Sangley, Cavite — to ease congestion at the Ninoy Aquino International Airport. — Reicelene Joy N. Ignacio

Thrift banks’ NPLs up at end-June

THRIFT BANKS’ soured debts climbed at end-June.

SOURED DEBTS held by thrift banks continued to climb in June to take a bigger share in loans for retail borrowers, latest central bank data showed.
Non-performing loans (NPLs) granted by these thrift lenders reached P46.664 billion by the end of the first semester, rising from the P46.067 billion in May. The stash of bad debts also jumped by 16.2% from the P40.153 billion incurred in June 2017, according to the Bangko Sentral ng Pilipinas (BSP).
NPLs refer to unsettled debts for at least 30 days past due date and are considered as risky assets due to a high risk of default that could spell losses for a bank. Having a lower share of bad debts means a bank is in better shape.
The surge in bad loans even outpaced the 10.4% growth in credit lines incurred during the period, with the total rising to P885.385 billion from P802.118 billion a year ago.
The NPLs took a 5.27% share relative to the banks’ total loan portfolio, higher than the 5.01% ratio posted in June 2017.
Thrift banks target individual borrowers and small-scale firms, which are deemed to be riskier segments compared to corporate clients. Consumer lending grew by 19.1% in June coming from 19.9% the previous month, according to BSP data.
These problem loans also grew faster than the thrift banks’ build-up of deposits, which posted a measly 3.2% increase to reach P963.758 billion. In turn, the loans-to-deposits ratio clocked in at 91.87%.
Despite the higher NPL stash, lenders kept their reserves for loan losses barely changed at P27.955 billion compared to P27.751 billion last year. This is enough to cover just 60% of the losses should these loans turn sour and are written off.
Meanwhile, non-performing assets held by thrift banks grew by a tenth to hit P22.829 billion, representing the value of properties and other assets seized from non-paying borrowers.
There are 53 thrift banks operating in the Philippines which booked a cumulative P8.026 billion net income from January-June. This spelled a decline from the P8.174 billion profits they made during the same period in 2017, according to BSP data.
Cost-to-income ratio clocked in at 64.14% for thrift banks, coming from 63.16% tallied a year ago. — Melissa Luz T. Lopez

More box office riches for Crazy Rich Asians

WASHINGTON — Rom-com Crazy Rich Asians continued to sparkle in North America, topping the box office for the second weekend running, according to industry estimates Sunday.
The Warner Bros. adaptation of Kevin Kwan’s best-selling novel of the same name took $25 million, almost matching its $26.5 million debut last week, box office tracker Exhibitor Relations said.
Starring veteran actress Michelle Yeoh, British-Malaysian former BBC host Henry Golding, and American sitcom star Constance Wu, the film tells the story of a American economics professor who meets her super-wealthy boyfriend’s family in Singapore.
It is the first major studio release with a mostly Asian cast since The Joy Luck Club in 1993.
Shark attack thriller The Meg clung on to the runner-up spot for another week, taking $13 million — a significant tumble from last week’s earnings of $21.2 million.
It stars action movie regular Jason Statham as a rescue diver who tries to save scientists trapped in a submarine from a huge, prehistoric shark.
In at third was newly released mystery The Happytime Murders, which took $10 million.
Based in a world where humans and puppets co-exist, the film follows a joint police force as they probe a recent murder spree targeting puppet TV stars.
On its heels with takings of $8 million was Tom Cruise’s action blockbuster Mission: Impossible — Fallout, which took fourth place in its fifth weekend in theaters.
Fifth went to Disney’s live-animated hybrid Christopher Robin, which took $6.3 million.
Ewan McGregor plays Winnie the Pooh’s now grown-up and stressed-out pal who reunites with his old stuffed friend.
Rounding out this weekend’s top 10 were: Mile 22 ($6 million); Alpha ($5.6 million); BlackKklansman ($5.3 million); A.X.L ($3 million); Slender Man ($2.8 million). — AFP

SM breaks ground on luxury beach condo in Nasugbu

SM PRIME, Inc. broke ground for its latest luxury beach condominium in Pico de Loro Cove within its Hamilo Coast development in Nasugbu, Batangas.
Costa del Hamilo, Inc. held the groundbreaking for Freia at Pico de Loro Cove last Aug. 9. The SM Prime unit is behind Hamilo Coast, a leisure development that covers 5,900 hectares.
With a contemporary tropical architecture, Freia offers 170 units consisting of two-bedroom flats and three-bedroom bi-level penthouses.
Units are sized between 67 to 392 square meters (sq.m.), and designed by acclaimed firms Broadway Malyan and GF & Partners. Prices of Freia units range from P9 million up to P47 million.
Condominium units will have balconies with views of the West Philippine Sea and Pico de Loro Mountains.
Freia is just a five-minute walk away from the Pico Beach with its 1.5 kilometers of white sand.
“Modern luxury characterizes Freia’s grand lobby and common areas. They utilize cutting-edge concepts and high-quality fixtures as prescribed by renowned interior designer, Budji+Royal,” the company said in a statement.
Freia will have resort-style amenities such as an outdoor pool, lounge deck, function rooms, and pocket gardens.
Unit owners at Freia will also get lifetime membership to the adjacent Pico de Loro Beach and Country Club.
Touted as a sustainable beach resort town, Hamilo Coast is located around 90 minutes from Manila via Cavitex and the new Ternate-Nasugbu Road.

Petron’s P20-B bond issuance gets top credit rating

PETRON CORP. has secured the highest credit rating for its proposed P20-billion fixed rate bond issuance this year, a local debt watcher said.
In a statement over the weekend, Philippine Rating Services Corp. (Philratings) said it has assigned a PRS Aaa credit rating to Petron’s proposed issuance. This is the top rating on Philratings’ credit scale, indicating that the offer has the highest quality with minimal credit risk, while the issuer has an “extremely strong” capacity to meet its financial obligations.
The rating was also given a stable outlook, which means that it is unlikely to change in the next 12 months.
Philratings said it took into account Petron’s growing sales volume and continued expansion, leading market position, sound business strategy, as well as the healthy economic outlook and demand for fuel in coming up with the rating.
Petron’s consolidated sales volume grew by three percent to 54.4-million barrels in the first half of 2018, driven by the single-digit growth in sales volume from both Philippine and Malaysian markets.
Citing date from the Department of Energy, Philratings said Petron is the market leader in the local oil industry, cornering a market share of 27.6%, followed by Pilipinas Shell with 20% and Chevron with seven percent. The company ended the first half with a total of 2,404 service stations, 4.3% higher than what it had in the same period a year ago.
Meanwhile, Petron said it believes to be the third top player in the Malaysian oil market, next to Petronas and Shell Malaysia. The firm increased its operations there by adding more service stations, closing the first semester with 624, 5.2% higher year-on-year.
Petron said it will continue expanding its retail service stations to support the growth in volume production. It is also focusing on selling high-value petroleum products to the most profitable segments in the domestic market to achieve better margins.
The proposed bond offering represents the final tranche of Petron’s three-year shelf registration with the Securities and Exchange Commission of up to P40 billion. The company has already issued the initial P20 billion in 2016, which also carries a PRS Aaa rating.
Petron said it will use the funds raised from the issuance for debt refinancing. It has engaged BDO Capital & Investment Corp. and BPI Capital Corp. as joint issue managers and, together with China Bank Capital Corp., as joint bookrunners and joint lead underwriters.
The company looks to list the bonds on the Philippine Dealing & Exchange Corp.
Petron grew its net income by 16% to P9.5 billion in the first six months of 2018, driven by a 32% increase in consolidated revenues to P273.5 billion. — Arra B. Francia

Solar Philippines eyes mini grids in 12 towns

SOLAR Philippines Power Project Holdings, Inc. said it installed in March a solar-battery mini grid for Paluan, Mindoro to bring 24-hour power to the town for the first time. — VICTOR V. SAULON

TWELVE remote towns in the Philippines, including four municipalities in popular tourist destination Palawan, are the possible sites for mini grids to be developed by Solar Philippines Power Project Holdings, Inc.
In a statement on Monday, Solar Philippines said its “Solar Para Sa Bayan” project is bringing 24/7 power to 12 towns “for the first time in their history” in response to the government’s call for the private sector to contribute to ending “energy poverty” in the country.
“Our aim is not to make the most profit, but to help the greatest number of our fellow Filipinos,” said Solar Philippines President Leandro L. Leviste.
He identified six towns in the statement, namely: Paluan and Lubang in Occidental Mindoro province; Dumaran in Palawan; Claveria in Masbate; Calayan in Cagayan; and Dingalan in Aurora.
He did not enumerate the other six, but in a Senate hearing earlier this month, he identified 12 towns, including Busuanga, Coron and El Nido in Palawan; Divilacan and Maconacon in Isabela; and San Pascual in Masbate.
Sought to validate the names of the 12 towns, Mr. Leviste said via e-mail: “For others on your list, I can confirm these are also on our list.”
He added the 12 towns indicated in his statement “have already energized or will energize within the next 30 days (weather permitting).”
Around 200,000 residents are expected to benefit from these projects, the first time a private company will energize a big number of households at zero cost to the government, he said.
“In terms of what will be completed by end of 2018, however, we [are] targeting at least double as many towns to benefit a total of 500,000 Filipinos, which is much more than existing rural electrification efforts, and at zero cost to government,” Mr. Leviste said via e-mail.
In March 2018, “Solar Para Sa Bayan” installed a solar-battery mini grid for Paluan, Mindoro to bring 24-hour power to the town for the first time. The company described the project as Southeast Asia’s largest using the technology and the first in Asia to feature Powerpacks from Tesla, a leading supplier of batteries and electric vehicles.
Solar Philippines said it was building hybrid mini grids in line with a plan by the Office of the President to issue an executive order to encourage private investment in rural electrification.
Mr. Leviste said he was hopeful that other stakeholders would also support such initiatives and help the Department of Energy achieve total electrification target by 2022.
The entry of private entities in some remote areas is a contentious issue for electric cooperatives that hold the legislative franchise to serve them.
The Philippine Rural Electric Cooperatives Association, Inc. did not immediately respond to a request for comment on the planned mini grids, or small-scale power grids that can be operated independently from the country’s interconnected network of power transmission facilities. — Victor V. Saulon

Robinsons Bank expects BSP okay for merchant acquiring business this month

ROBINSONS BANK Corp. wants authority to accept credit and debit card payments.

ROBINSONS BANK Corp. expects its merchant acquiring business to be approved by the central bank within the month as it aims to expand its product offering and maximize its big retail ecosystem.
Robinsons Bank President and Chief Executive Officer Elfren Antonio S. Sarte said the Gokongwei-led lender is waiting the approval of the Bangko Sentral ng Pilipinas (BSP) to accept credit and debit card payments.
“We are still waiting for the BSP approval. We are hoping to get MB (Monetary Board) approval within the month,” Mr. Sarte told BusinessWorld in a text message on Friday.
A merchant acquiring bank is a lender that processes credit and debit card transactions on behalf of a merchant. Mr. Sarte said the bank wants to venture into accepting card payments to complement its credit card business.
“One of the strong [motivations] is we are completing our product offering having launched our credit card issuing business,” the bank president said.
The lender recently introduced Robinsons Dos Mastercard, a credit card that enables holders to pay in two-month installments without added interest and minimum amount required.
Mr. Sarte noted that the bank wants to maximize its “big retail ecosystem” where it can deploy point-of-sale (POS) credit and debit card payment services to the retail network via its parent firms which controls a number of retail assets.
Aside from Robinsons Malls, it will also market the acquiring terminals to other retailers.
Robinsons Bank is the financial services arm of the JG Summit Group. According to its website, the lender is 60% owned by JG Summit Capital Services Corp. and 40% by Robinsons Retail Holdings, Inc.
Mr. Sarte said the bank did not inject any capital into the merchant acquiring business venture. “No [capital expenditure] — our model is fee-sharing with our POS provider.”
Robinsons Bank’s net income reached P201.8 million in the first half of 2018, up 33.9% from the same period last year.
It is currently licensed as a commercial lender and is the 19th biggest in the industry in asset terms as of end-March, data from the central bank showed. — Karl Angelo N. Vidal

Former Lynyrd Skynyrd guitarist Ed King, 68

LOS ANGELES — Ed King, a former lead guitarist for the Southern rock band Lynyrd Skynyrd who co-wrote one of the group’s best known hits, “Sweet Home Alabama,” has died at age 68, a founding member of the band said on Thursday.
King joined Lynyrd Skynyrd in 1972 not long after the band formed, and with two other lead guitarists, Gary Rossington and Allen Collins, helped create the group’s powerful triple-guitar sound prominent on such rock classics as “Free Bird.”
Rossington, a founding member of the band, said on Thursday he was “shocked and saddened” by King’s death.
A notice on King’s Facebook page said he died at his home in Nashville, Tennessee, on Wednesday. No cause of death was revealed.
King left the group in 1975, two years before a plane crash killed two of the band’s members and a backup vocalist.
“Ed was our brother, and a great songwriter and guitar player,” Rossington wrote on the band’s official Twitter account. “I know he will be reunited with the rest of the boys in Rock & Roll Heaven.”
King returned to Lynyrd Skynyrd when the band regrouped in 1987, and stayed until 1996. He was inducted into the Rock and Roll Hall of Fame as part of the band in 2006.
During his original stint, King co-wrote several songs, including 1974 hit “Sweet Home Alabama,” a retort to Neil Young’s “Southern Man.” The California native previously played with the psychedelic rock band Strawberry Alarm Clock. — Reuters

New Seda Hotel opens in Cebu City

AYALA LAND, Inc. (ALI) has opened its newest Seda Hotel in Cebu City this month, targeting both business and leisure travelers.
ALI had refurbished the former Cebu Business Park hotel and rebranded it as Seda Ayala Center Cebu (Seda ACC). It will feature guest rooms, function rooms, and amenities from the plans of architect and interior designer Conrad Onglao.
The redesign includes changing the hotel’s lobby to show Seda’s signature open layout. The company has also expanded the lobby’s seating capacity and reception area, which now contains computers free for use of guests as well as an all-day dining facility.
The guest rooms have also been updated to showcase a modern, minimalist layout featuring earth colors. Function and meeting rooms likewise have been altered using lighter and brighter colors.
Prior to its opening, Seda ACC Director of Sales and Marketing Frances Alfafara noted the hotel has already been receiving requests for guest and function room reservations until early 2019.
The Seda brand’s entry into the Cebu market looks to take advantage of the lack of modern hotel facilities in the booming financial district. ALI noted that Seda ACC’s location gives guest easy access to key office of multinational firms in Ayala Center Cebu, as well as its entertainment and retail options.
“When the property at the Cebu Business Park, the most popular of the business districts commanding the highest values, became available last year, we felt Seda was ready to compete with all the other established hospitality brands in Metro Cebu,” Seda Senior Group General Manager Andrea Mastellone was quoted as saying in a statement.
The company looks to have many repeat guests coming into Seda ACC, as it delivers quality service from its front-liners.
“Whichever way you look at it, excellent service and superior location represent great value, the key benefit of every Seda hotel. We have no doubt that Seda Ayala Center Cebu will also be known for the same, as well as the seamless experience it offers to its guests,” Ms. Mastellone said.
Seda ACC is the ninth property carrying the homegrown Seda brand. ALI currently operates Seda hotels in eight locations, namely Bacolod, Cagayan de Oro, Davao, Iloilo, Laguna, Quezon City, Taguig, and Palawan.
This is part of ALI’s goal to expand its Seda hotel brand to 3,500 rooms by 2019. It is also scheduled to open Seda hotels in Circuit Makati, Arca South in Taguig, Ayala North Exchange in Makati, the Bay Area, and the Cebu IT Park.
The company is also expanding Seda Bonifacio Global City in Taguig, adding 342 more rooms to its flagship hotel. — Arra B. Francia

OUTLIER: Ayala Land, Inc.

FOREIGNERS loaded on Ayala Land, Inc. (ALI) stocks last week, making it the most actively traded stock in the local bourse during the period.
ALI had the highest value turnover last week, with P2.519 billion worth of 57.82 million shares exchanged hands on the trading floor from Aug. 20 to Aug. 24, data from the Philippine Stock Exchange showed.
Its shares closed at P43.9 apiece on Friday, down 0.9% from the previous day, but gained 3.29% on a week-on-week basis. For the year, ALI shares are down 3.52%.
“We can attribute this to foreigners going back to the local market. Foreigners are looking for highly liquid stocks, with high recurring income contribution, preferably in a growing industry, and with an adequate share price upside. All of these points to ALI,” said John Paolo D. Ayson, equity research analyst at RCBC Securities, Inc.
Stock market data showed net buying on ALI amounted to P693.34 million from Aug. 20 to Aug. 24, a reversal of the P23.51-million net selling a week before.
Mr. Ayson noted ALI as one of the most liquid stocks as well as having a high recurring income from its malls and office businesses, which is supported by the property sector’s “fast pace” at around 17%.
ALI’s latest earnings report showed attributable profit expanding by 34% to P7.97 billion in the second quarter from P5.95 billion in the same period last year. This brought its January-June attributable profit up 18% to P13.5 billion.
Jeng T. Calma, trader at A&A Securities, Inc. said that an immediate reason for capturing ALI stocks would be its cash dividend distribution on Sept. 6, with a dividend rate at 0.2%. She also said ALI’s stock price settled at a “buying opportunity” price last week, following a sharp dip from a high of P43.20 to a low of P40.35 from Aug. 9 to Aug. 14.
Inaabangan talaga ang malaking drop ng ALI sa price, kasi mabilis sya usually mag-rebound. (Buyers would usually lookout for a big dip in ALI’s stock price, as it usually rebounds immediately),” she said.
For this week, Ms. Calma expects ALI to stay at its P42 and P46 support and resistance levels, respectively. “This week is another cycle, after ALI reached a new high last week. Investors will lie low in the following days,” she said.
Mr. Ayson also sees ALI trading between the support and resistance levels of P42 and P46, respectively, this week. This could still go up by 18% to his target price of P51.00 in the next 12 months, he said.
Mr. Ayson’s earnings forecast for ALI was at 17% this year, with growth coming from across all its segments.
Under its 2020 Vision, ALI targets to grow 20% annually to hit a net income of P40 billion from its residential development and leasing segments. — C.V. Olano

India loans under scrutiny on bankruptcy deadline

A DEADLINE set by India’s central bank to restructure an estimated 3.6 trillion rupees ($52 billion) of stressed loans may push dozens more companies into bankruptcy.
The Reserve Bank of India (RBI) in February introduced new rules and a 180-day timeline for banks to recast loans once payments are missed, scrapping previous methods that could take an indefinite amount of time. Companies that were delinquent when the norms came into force ran out of time Monday, after which lenders must start moving court to admit the cases under India’s Insolvency and Bankruptcy Code.
This marks the latest attempt by the RBI to clean up banks that are suffering from the world’s worst bad-loan ratios after Italy, and have more than $210 billion of stressed debt on their balance sheets. The central bank has already asked lenders to take about 40 large defaulters to bankruptcy court as overdue borrowings hamper fresh investment. In May, the nation’s first big success under the new insolvency law handed about $5 billion to lenders after Tata Steel Ltd. bought insolvent Bhushan Steel Ltd.
“There’s no doubt this circular will clean up the banking system,” said Prabal Banerjee, group finance director for conglomerate Bajaj Group. There could be “serious consequences” for the economy if the bankruptcy process fails to throw up buyers and many companies are forced into liquidation, he said. “It’s more important for authorities to nurture and find the right owners for struggling companies.”
DEBT BURDEN
India has one of the worst bad-loan ratios among the world’s 10 largest economies, with the central bank predicting an increase to 12.2% by March 2019 from 11.6% in the previous year. That’s just behind Italy, where 14.4% of gross loans are non-performing, according to data compiled by the International Monetary Fund.
About 70 large companies with debt of approximately 3.6 trillion rupees risked being taken to bankruptcy court following the RBI’s February directive, Ashish Gupta and Kush Shah, Mumbai-based analysts at Credit Suisse Group AG wrote in a June report.
Defaulting companies have been working with lenders to restructure their loans ahead of the deadline, according to bankers familiar with the discussions, who asked not to be identified as the matter is private. More than 35 power companies and over 40 non-power firms have been impacted by the RBI’s move, one of the people said. Some deals in the power sector are expected over the next few weeks, the people said.
POWER SECTOR
Loans to about seven to eight power projects worth 170 billion rupees may be recast soon, the Press Trust of India cited State Bank of India Ltd. Managing Director Arijit Basu as saying. India’s largest bank doesn’t expect a spurt in accounts being referred to the bankruptcy court as the lender has been working at resolution and hasn’t waited for the deadline, Basu said, according to the report.
Credit Suisse had estimated in June that about 40 power projects were among companies at risk.
Given the widespread stress, power producers have approached the Allahabad High Court to prevent lenders from initiating insolvency proceedings against them.
The new debt-servicing rules are too stringent for a sector that’s battling cash flow issues because of delayed payments by state distribution utilities and late regulatory clearances for cost related tariff hikes, the Association of Power Producers said in a letter to central bank Governor Urjit Patel in March. An order from the high court is expected soon after both sides concluded their arguments.
The Supreme Court has agreed to examine an RBI plea to transfer the case from the high court to the top court on Tuesday. — Bloomberg

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