Wadia Group asserts Go First bankruptcy won't affect one's financial situation

 Wadia Group asserts Go First bankruptcy won't affect one's financial situation

Wadia Group asserts Go First bankruptcy won't affect one's financial situation

Indian Aviation Update: According to industry analysts, lending by domestic banks to other group entities of insolvent corporations is presently unrestricted by regulation, although it is difficult to carry out these transactions due to the elevated credit risks at the group level.

Go First bankruptcy: In response to a thorough questioning, a spokeswoman said, "No lender, global or domestic, had approached Wadia Group regarding any potential bid for Go First."

The budget airline Go First's bankruptcy in May of last year, according to Nusli Wadia-led Wadia Group, won't prevent it from raising money in the future for other group companies. In answer to a question from Moneycontrol, a company spokeswoman said, "All Wadia Group companies have strong credit ratings."

The representative said, "All Wadia Group companies are well funded for all future growth plans," without providing any more information. Founded in 2005, GoFirst voluntarily filed for bankruptcy in May of last year. The airline owes around Rs 6,521 crore in outstanding debt, the majority of which is owing to public sector banks and lenders.

There were rumors that the Wadia Group may make an offer for the airline when Go First filed for bankruptcy, perhaps with the help of a worldwide fund. The Wadia Group ultimately decided against moving forward with such a proposal, however.

Under some circumstances, regulations permit promoters of bankrupt enterprises to submit a bid for the company via a competitive procedure. The bankruptcy settlement process often entails significant reductions to creditors, which lessens the company's financial load and increases the likelihood that the business will recover.

As stated by the spokesman in response to a thorough questioning, "Wadia Group was not approached by any lender, global or domestic, for any possible value bid for GoFirst."

Senior bankers seeking anonymity said that it is difficult to carry out such transactions given the heightened credit risks at the group level, even though there are presently no regulatory prohibitions on lending by domestic banks to other group businesses.

The spokesman stated, "It is sad that the airline operations could not be continued due to Pratt & Whitney although significant fund investment provided by the promoters (up to Rs 3,200 crore in the last three years) and full support from the government and banks." P&W's) faulty engines, and they aren't fulfilling their ethical and legal contractual duties to fix malfunctioning engines."

With the group flagship Bombay Dyeing & Manufacturing Company Limited (BDAMCL) enjoying a solid market position in the polyester staple fiber (PSF) category and a robust track record of booking development in the existing real estate, CRISIL Ratings raised the credit rating of BDAMCL in December to Stable. Is done. Real estate ventures and a robust financial risk profile.

However, given cash flow and refinancing issues, Care Ratings had voiced concerns in May of last year about Bombay Dyeing's capacity to service its debt due between FYs 2024 and 2025. To satisfy its financial commitments that mature in FY24 and FY25, the business did, however, manage to collect over Rs 5,000 crore by selling a 22-acre premium land block in Worli, Mumbai. Another firm in the India Ratings and Research (Ind-Ra) group, The Bombay Burmah Trading Corporation Limited (BBTCL), had its long-term issuer rating lowered from 'AA' to 'A+' in September, with a negative outlook.

Although Britannia Industries, the most lucrative company in the group, is in good financial standing, it has often taken money out of its cash reserves to provide dividends to stockholders.

Britannia announced an interim dividend of ₹72 per equity share for the fiscal year FY23 in April, despite flat sales. This represented a distribution of 7,200 per cent in comparison to the face value of Rs 1 per share of the business for the preceding fiscal year. In August 2020, the firm distributed the biggest dividend in its history since becoming public, at Rs 83 per share. In the past, promoters have often secured financing from foreign lenders in exchange for pledged Britannia Industries shares in order to finance other ventures, such as GoFirst.