Promoters of the beleaguered Ratnagiri Gas and Power (RGPPL) will meet on Tuesday to vote on a proposal to allow lenders to convert more of their debt into equity. The proposal is expected to go through since three of the four promoters have already agreed to the conversion, according to a source familiar with the matter.
Loans amounting to just R405 crore will be converted to equity, a small fraction of RGPPL?s total outstandings of around R8,500 crore.
State Bank of India, IDBI Bank, ICICI Bank and Canara Bank form the consortium of lenders to RGPPL and currently hold a 16.87% stake in the company. After the conversion, their stake will increase to 27%. NTPC and GAIL?s shareholding, which stands at 32.86% each, will shrink to 28.8%, while that of the Maharashtra government, which was 17.41%, will reduce to 15.2%
RGPPL has not made any repayments after May to lenders, according to sources familiar with matter.
The company, which operates the 1,967 MW Dabhol gas-based power project, last made an interest payment of about R80 crore in late May this year, according to an RGPPL official.
The court?s rationale was that transferring the shares did not lead to any income, so the question of imposing a tax did not arise.
The HC adjourned hearing on a similar case involving Shell India to November 18. Some similar cases involving other companies have been ?listed for direction? by the HC after Diwali? since the court has given a ruling on the principle that share premiums cannot be added to income tax, experts expect other rulings to be similar.
Had the taxman won the two cases, Vodafone India would have been liable to pay tax on an additional income of over R4,800 crore. While the principal tax demand could be about a third of this, adding penalty of about an equal amount and interest on it could make the total additional liability much higher.
It remains to be seen if the government will appeal the case till the Supreme Court, though that has been the norm so far. Lawyers representing the government and tax department refused to comment.
FE had on Saturday reported that the HC?s ruling in favour of Vodafone India will likely set free about 26 other companies including Shell India, HSBC Securities and five Essar Group companies that have similar transfer pricing dispute with the taxman in connection to the shares sold by them to their parent companies.
