HDFC AMC marks down Essel Group’s NCDs by Rs 120 crore

With the share prices of Zee Enterprises and Dish TV — which Essel had put up with lenders as collateral — falling, HDFC has marked down Rs 120 crore out of the Rs 149 crore that Essel has to repay, said a person familiar with the matter.

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HDFC Asset Management marked down the value of its holdings in Essel Group’s non-convertible debentures (NCDs) by Rs 120 crore during the quarter ended March 2020.

The country’s second largest mutual fund has taken the losses in its books as it had bought out Essel Group’s papers worth Rs 500 crore in June 2019 from its debt schemes in an attempt to shield unitholders. But the move drew the ire of the company’s shareholders.

The asset manager has received Rs 375 crore out of the Rs 500 crore that Essel owed it after the group sold shares to a foreign investor.


Essel Group owes HDFC AMC about Rs 149 crore, which includes interest. With the share prices of Zee Enterprises and Dish TV — which Essel had put up with lenders as collateral — falling, HDFC has marked down Rs 120 crore out of the Rs 149 crore that Essel has to repay, said a person familiar with the matter. An email query to HDFC Asset Management was unanswered till press time.

Zee shares fell from Rs 431 on April 1, 2019 to Rs 124 on March 31, 2020. Dish TV fell from Rs 39.9 to Rs 4.1 in the same period.

The mark down reflected in losses under the ‘other income’ component of Rs 26.5 crore in January-March as against gains of Rs 61.2 crore in the year ago period.
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For the remaining Rs 29 crore of Essel paper, HDFC Asset Management has collateral worth Rs 35.8 crore. In a presentation to investors, the fund house said, “The carrying value of these NCDs as at March 31, 2020 was Rs 29.4 crore. The value of the collateral as at March 31, 2020 is Rs 35.8 crore.”

In late January, mutual funds including HDFC AMC had agreed not to sell shares of Zee, which they held as collateral and gave time to Essel till September to repay their debts. Mutual funds then collectively held over Rs 7,000 crore worth of Essel papers.
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