Kotak puts Rs 377 cr of MF investor’s money in Essel

The Kotak Mahindra Asset Management Company (AMC) invested Rs 377 crore of mutual fund investors’ money from fixed maturity plans (FMPs) into the Essel Group – that has been reeling under the woes of financial stress.

The asset management company, in reply to the questionnaire from DH, said that all these investments were made in 2016.

Despite debt repayment being pushed to September, which would ideally qualify the Essel Group as a stressed asset, the Kotak MF spokesperson said that Essel is not a stressed asset.
“Investments in Zee Promoter Group debt instrument is not a stressed asset,” the Kotak spokesperson said in a statement.

When the collateral cover of Essel Group fell short, it wasn’t topped up. And second, when the debt repayment was pushed to September 30, it would make Subhash Chandra owned company a non-performing asset by the RBI norms. However, instead of the central bank, Securities Exchange Board of India (Sebi) is the regulator in this case – which has constantly declined to comment on the issue.

The Essel Group has issued Rs 13,500 crore of such equity-backed debt instruments. Chandra convinced 44 lenders, including mutual funds and non-banking finance companies, to hold off on selling any shares till September 2019.

Essel Group firms have a whopping debt of Rs 17,000 crore, in lieu of which Chandra and family had pledged over half of their 41% stake in Zee and almost all of the 61% stake in Dish TV – in a bid to fund its infrastructure projects.