Moneylife Impact: Supreme Infrastructure Withdraws Controversial Preferential Issue to SBI
Moneylife Digital Team 27 September 2024
In a significant development following Moneylife's report, Supreme Infrastructure India Limited (SIIL) has withdrawn its proposed preferential issue of equity shares and convertible warrants that had raised serious concerns about corporate governance and public fund management. Moneylife exposed the questionable nature of State Bank of India (SBI)'s planned investment in SIIL through preferential allotment, despite having written off over 93% of its loans to the company. (Read: After Suffering a 93% Write-off in Its Loans, SBI Buying Equity in Defaulter Supreme Infrastructure!)
 
In a regulatory filing, SIIL says, "(We) submit this letter to inform about the decision of the board of directors of the Company to withdraw and cancel the previously announced outcome of the board meeting held on Monday, 16 September 2024 and subsequentlyissued first corrigendum dated 18 September 2024 and second orrigendum on 20 September 2024 wherein the board of directors had considered and approved the 'issuance and allotment of equity shares and convertible share warrants by way of preferential issue on private placement basis (preferential issue)."
 
Moneylife's report, published on 23 September 2024, highlighted how SBI's decision to invest Rs24.33 crore for a 2.49% stake in SIIL raised alarming questions about risk assessment and potential conflicts of interest. The article pointed out that SIIL had defaulted on Rs1,023.42 crore of SBI loans, making the Bank's eagerness to take an equity position highly unusual.
 
The report sparked widespread debate and drew political attention, with the Indian National Congress quoting the Moneylife report - calling for Reserve Bank of India (RBI) intervention to examine SBI's decision-making process. Congress leader Jairam Ramesh, quoting the Moneylife report, had warned that such arrangements could create a dangerous precedent in India's corporate debt landscape. (Read: Congress Asks RBI To Step In SBI Buying Shares in Defaulter Supreme Infrastructure)
 
SIIL's latest exchange filing withdrawing the preferential issue suggests that the increased scrutiny following Moneylife's exposé may have played a role in this decision. The company has not provided specific reasons for the withdrawal, simply stating that the board has decided to cancel the previously announced outcome.
 
This development underscores the importance of investigative financial journalism in ensuring transparency and accountability in the corporate and banking sectors. Moneylife's prompt reporting on the SBI-SIIL case appears to have catalysed a chain of events leading to the cancellation of a potentially problematic financial arrangement.
 
The withdrawal of the preferential issue raises new questions about SIIL's future plans for debt restructuring and the role SBI will play, going forward. It also highlights the need for stronger oversight mechanisms in public sector banks' dealings with defaulting companies. 
 
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Comments
david.rasquinha
2 months ago
Kudos to MoneyLIfe
saran2sai
2 months ago
This is a nasty slap on the face of banking policies. But had it not been for such proposed conversion of debt to equity, then how the management can be changed to make profit ? At least can it not improve to Yes Bank's level ?
Jitendra B Parmar
2 months ago
Congratulations to Moneylife Team. ????
rameshjrdhr5
2 months ago
SBI is the most notorious among the PSBs in writing-off of loans in lacs of crores of rupees in the name debt resolution. A haircut of up to 98% means loans were given free of costs to shoddy borrowers who happened to be corporate entities. The new SBI CMD Mr. C S Setty played googly in his maiden match on debt restructuring against SIIL. We expect more to come from his quiver in the coming days. Carelessness and irresponsibility in dealing public money (other people's money) begets greed among top brass of the PSBs which is facilitated by IBC to take a haircut as much as 98%. This favour is handsomely rewarded by the defaulting corporate entity off the public eyes. What oversight had been done by MoF (DFS), RBI, and other govt agencies?
Meenal Mamdani
2 months ago
Wonderful and all thanks to MLF which is basically Sucheta Dalal and Debashis Basu.

If only we had such an organization and team to pinpoint the various questionable by other arms of this govt, think how much the citizens could have achieved.
rangarao.ds
2 months ago
Eternal vigilance (of the MLF) is the price of liberty.
jayaramanvee
2 months ago
Not only the companies work overtime to paint the rosiest picture to the Banks, even Banks get whitewashed with these type of gimmicks. SBI even after so many years of experience stands in front to get fooled. Forget about cancelling preferential allotment, RBI should get to the root of this stupidest decision. This is similar to SBI exposure to Alok Industries Ltd where earlier they took a massive hair cut and then they gave fresh loans in a platter when RIL invested in that company with a highly skewed D:E ratio.
hari.krv
2 months ago
Great work MoneyLife ????????????
parimalshah1
2 months ago
But how is it that SBI agreed? Let it not go scot-free. RBI and SEBI must take cognizance of this attempt to fool the public.
s5rwav
2 months ago
Congratualations to Moneylife Team for the Extraordinary Impact.
makhaik
2 months ago
Hurray, every victory counts.

After putting in a lot of taxpayer money to sort out the Non Performing Asset (NPA) burden of Public Sector Banks (PSBs), Phone Banking channels appear to have been reactivated and this controversial investment by State Bank of India is clearly a glaring case.

By bringing the dubious SBI investment into light after having shaved off 93% of investment losses in an earlier investment with the same entity - has rightly questioned the decision making process of State Bank of India.
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