IDBI Bank third lender to drag Siti Networks to bankruptcy court

Yet to receive notice from NCLT, firm says; HFDC, IndusInd Bank had filed petitions earlier

Essel Group entity Siti Networks (SNL) on Friday said IDBI Bank had filed an insolvency petition against it before the National Company Law Tribunal. Two other lenders – Housing Finance Development Corporation (HFDC) and IndusInd Bank – had filed petitions against the firm earlier under the Insolvency and Bankruptcy Code.

In each case, SNL is said to have defaulted on repayments in excess of Rs 100 crore.

Siti said in a BSE filing that it had been made aware that IDBI Bank had filed an insolvency petition before the NCLT’s Mumbai Bench. However, it said it had not received any notice from the NCLT in this regard. Its shares declined about 10 per cent to Rs 1.99 apiece on the BSE.

On November 30, Siti Network had issued a statement where it pegged the amount overdue at Rs 1,173 crore to seven lenders — including Rs 279 crore to Housing Finance Development Corporation, Rs 269 crore to Axis Bank, Rs 156 crore to IndusInd Bank, and Rs 147 crore to IDBI Bank. These lenders had given the firm term loans and working capital facilities with interest rates varying from 9 per cent to 13 per cent. 

The firm continued to incur losses in the first half of the financial year 2022-23 (H1FY23), and it had negative working capital and negative net worth as of September 30. On a consolidated basis, it booked a loss of Rs 145.4 crore on revenues of Rs 683.9 crore in H1Fy23. In FY22, it reported consolidated losses of Rs 260.9 crore on revenues of Rs 1,460.8 crore.

The company acknowledged that there had been delays in payments of obligations and borrowings. But, new revenue streams and several cost reduction initiatives it had introduced were expected to help revenue grow and improve operating margins. This was likely to result in reasonable improvement in profitability, it said.

According to notes appended with the company’s Q2FY23 results, HFDC filed an application with NCLT Mumbai Bench for insolvency proceedings against Siti Networks on the grounds that the company defaulted on repayment of Rs 296.06 crore in March. In June, HFDC sold the loan to asset reconstruction outfit Assets Care and Reconstruction Enterprise (ACRE).

IndusInd Bank also approached NCLT against SNL for defaulting on dues worth Rs 148.82 crore.

The Essel Group entity has also not been cooperating with rating agencies as well. In January, CARE Ratings said it had sought information from SNL, but the company did provide it. As a result, SNL’s rating on bank facilities was denoted “issuer not cooperating”.

SNL is a multi-system operator (MSO) and wired broadband service provider. It has a network of more than 33,000 km of optical fibre and coaxial cable. It provides its cable services in India to around 580 locations, reaching over 11.55 million digital viewers, it said.