On Episode 928 of The Core Report, financial journalist Govindraj Ethiraj talks to Mukesh Chand, Senior Counsel at ELP (Economic Laws Practice).

SHOW NOTES

(00:00) Stories of the Day

(01:00) Markets Adjust To Longer War Reality In West Asia

(04:31) PayPal sees a takeover bid that could value it more than $50 billion

(05:45) The Second Phase Of India’s Semiconductor Mission Kicks Off With 127,000 Crore

(09:38) NCLT Approved A Record 78 Resolution Plans Under The Insolvency And Bankruptcy Code In The Last Quarter

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NOTE: This transcript contains the host's monologue and includes interview transcripts by a machine. Human eyes have gone through the script but there might still be errors in some of the text, so please refer to the audio in case you need to clarify any part. If you want to get in touch regarding any feedback, you can drop us a message on feedback@thecore.in.

Good morning, it's Thursday, the 16th of July, and this is Govindraj Ethiraj broadcasting and streaming weekdays from Mumbai, India's financial capital.

Our top stories and themes…

Markets adjust to a longer war reality in West Asia.

The second phase of India's semiconductor mission kicks off with 127,000 crores.

National Company Law Tribunal of India says it approved a record 78 resolution plans under the Insolvency and Bankruptcy Code in the last quarter. Now, what does that number actually mean?

And PayPal sees a takeover bid that could value it more than $50 billion

Markets, Rupee, Gold and AI Chips Stocks

The markets, as we discussed on Wednesday, are proving to be more resilient than one would have expected to the developments in West Asia with the ceasefire seemingly now existing only on paper.

There is also fatigue and perhaps the acceptance of a forever war-like situation that was anticipated and feared by many in recent months. Remember, Russia invaded Ukraine in February 2022 and expected that all would be over in a week or two as it would march into Kiev. Ukraine did not give in nor give up and instead took the fight into the Russian camp, as we've been seeing increasingly so in recent months.

Now, the bottom line is it's almost four and a half years of fighting and there is no sign of an end. America's war against Iran has now lasted four and a half months with no end in sight either. So, markets, like in the past, learned to adapt as do businesses and supply chains, including for critical flows of oil and gas.

With all of this as a backdrop, on Wednesday, stocks were higher, thanks mostly to financial stocks ahead of key earnings. The Sensex was up 130 points to close at 77,185. The Nifty 50 was up 26 points to close at 24,074.

The broader markets did better with the Nifty mid-cap 100 rising about 0.28% and the Nifty small-cap 100 rising about 0.7%. Now, crude oil prices, crude was up about a percent to $85.50 a barrel as the US and Iran attacked each other and claimed control of the state of Hormuz. The question, of course, is will crude keep inching up rather than jump suddenly and back to around those $90, $95 per barrel levels. We, of course, don't know, but economists, I'm sure, are obviously reworking their reworked calculations in terms of estimating impact on the economy.

Meanwhile, India's IPO market is back on track, it would appear, at least with the prominent SBI Funds Management, seeing its close to $9 billion initial public offering or IPO fully subscribed on the second day of bidding on Wednesday. SBI Fund Management is a JV between State Bank of India and Europe's biggest asset manager, Amundi, and manages funds of about 12.5 lakh crore rupees or $131 billion as of March 2026, thus making it the largest mutual fund in India. So will this start a fresh procession of new IPOs? Well, there are many large waiting in the wings, as we know, and they surely will.

Though some analysts did suggest that SBI Funds has priced it well, leaving some upside on listing and the image thereafter. The rupee on Wednesday was close to its one-month low before ending nearly flat and holding out between portfolio inflows and dollar demand from local corporates, according to Reuters, which added that it closed at Rs. 96.25 per dollar, pretty close to its previous close.

Gold prices were down, as inflation concerns are once again resuming or resurfacing, and spot gold was at $4,027 per ounce on Wednesday morning. Global markets, of course, are firm again. SK Hynix led a broad rally in Asian technology stocks on Wednesday, tracking a rebound in US semiconductor stocks after a sharp sell-off earlier this week, according to a CNBC report, which of course highlights how unpredictable this particular part or segment of the market has become.

The South Korean memory chipmaker was 8% higher in Seoul after its US shares rose 27% overnight, it had listed there earlier. Just a day before, the same stock saw the steepest one-day decline in South Korea, as investors locked in profits and, by the way, just a day before that, SK Hynix saw the steepest one-day decline in South Korea, that's on Monday, as investors sold amidst growing worries over AI spending, and of course, those worries seem to have generally evaporated a day later. Samsung Electronics and Seoul Semiconductor also rose more than 6%, according to CNBC.

Elsewhere, PayPal was sharply up in pre-market trading on Wednesday after Stripe and Advent International apparently made a joint offer to acquire the payments firm in a $53 billion deal and are planning to buy PayPal for $60.50 per share, according to Reuters. PayPal, of course, has an interesting past. Apart from the fact that a lot of people in India use it, it was founded in December 1998 as Confinity by Peter Thiel, Max Levchin, and Luke Nozek.

In March 2000, it merged with X.com, an online banking company founded by Elon Musk, Harris Fricker, Christopher Payne, and Ed Ho, which ultimately led to the creation of the PayPal service and company. Elon Musk became CEO of the company before he sold out and the rest is, well, you know the rest. Elsewhere, China's economy in the second quarter expanded at its weakest pace since the fourth quarter of 2022, reinforcing calls for policy stimulus as an accelerating slide in investments deepened the strain on growth while consumption stayed subdued, according to a CNBC report.

GDP came in at 4.3% in the April to June period, according to data from China's National Statistics Bureau, below Economist's forecast of 4.5% growth in a Reuters poll. In the first quarter, growth was at 5% in China.

What is the latest Update on the India Semiconductor Mission?

The cabinet on Wednesday approved the second phase of the India Semiconductor Mission with an outlay of ₹127,000 crore.

The cabinet also cleared the second phase of the Mobile Phone Manufacturing Scheme with an outlay of ₹62,500 crore. Of the 12 semiconductor chip manufacturing and packaging plants approved so far by the government under the mission, three have started commercial production, according to the country's Union Electronics and Information Technology Minister. Under the second phase, the government will provide a mix of grants and equity investment for the design of strategic and commercial chips in India.

For the manufacturing of equipment, chemicals, gases, and materials, the government will provide a flat incentive of 30%. Elsewhere, Taiwan's second-largest contract chip maker, United Microelectronics Corporation, or UMC, on Tuesday said its first mass-produced silicon photonics wafers were manufactured within its Singapore facility. UMC wants to address the growing demand for high-speed optical interconnects in AI and hyperscaler data networks.

How is India Avoiding US Tariffs?

India has prohibited the import of goods produced using forced labour, the Ministry of Commerce said on Tuesday in a move that could help avert new tariffs from a probe by the United States, according to the Reuters report. India is one of the several countries facing a proposed new US trade tariffs of up to 12.5% over allegations that it failed to prohibit import of goods produced with forced labour. The ministry's notification said it empowers the central government to prohibit by notification import of goods produced or manufactured wholly or in part through the use of forced labour.

Both sides insist all is going well and heading towards a favourable outcome, presumably, for both sides.

How efficiently can companies emerge from bankruptcies in India?

This is a larger ease-of-doing business question. How efficiently can companies emerge from bankruptcies in India? The latest data from the National Company Law Tribunal, or NCLT, says that it approved a record 78 resolution plans under the Insolvency and Bankruptcy Code, or IBC, in the first quarter of 2026-27, which is apparently its best first-quarter performance since the Insolvency Framework was introduced in 2016, according to a report in Money Control.

The data that was released on July 14 said the tribunal had approved 58 resolution plans in the first quarter of FY26 and 73 in the corresponding period of FY25, that's fiscal year 25. So, from 73 to 58 to now 78. The total value of the resolution plans approved in that April to June quarter were at about 5,500 crores.

As of June 30, the NCLT had approved 1,628 resolution plans with an aggregate value of more than 478,000 crores or 4.78 lakh crore rupees since the IBC came into effect. Now, this is the entire journey till now. The NCLT is understaffed at this point.

As of last week, it was functioning with one president, 26 judicial members, and 25 technical members against a sanction strength of one president, 31 judicial members, and 31 technical members, thus leaving 11 vacancies across the that money control report. Amongst the benches, Mumbai led with 18 approved resolution plans worth about 2,500 crores followed by Kolkata. While the number for the last quarter might be at a record, the overall pace is still slow and the pendency is high.

I spoke with Mukesh Chand, Senior Counsel at the Economic Laws Practise who works on these cases and I began by asking him to explain the significance and context of this record number.

INTERVIEW TRANSCRIPT

Mukesh Chand: As you may be aware that IBC was visualised as a law which will consolidate all the laws scattered over a number of statutes and it will provide a very fast resolution for a sick company or insolvent company and also pay way for recovery of banks which were struggling to recover their dues on account of the money involved stuck up in these large value accounts especially which were under BFIR. They started with the Reserve Bank referred cases then the process began in 2017 really began with 2017. So over a period of time all the stakeholders filed more than 8000 cases under IBC.

So pendency is huge compared to the capacity and the number of benches. As of now around 3000 more than 3000 cases are still pending for consideration. See if you compare the current figure shared by NCLT that 79 cases resolution plan have been approved it's an encouraging sign.

See compared to the speed of approval in past year this approval rate is very encouraging because especially the banks are looking at is the faster recovery the faster realisation of that would happen when their effort in getting a resolution plan gets realised and plan gets implemented. So banks have been very advocating for faster approval of resolution plan but if you compare to the time taken see this is only one aspect of issue the proven of 78 the 79 case is one aspect of issue. You have to see how much time is being taken by the courts or NCLT in approval of the resolution plan after it is plan is submitted by after approval of COC.

It is a committee of creditor which is formed under provision to IBC to evaluate the resolution plans basically to evaluate the resolution plan and to guide insolvency provision in running the process. So as per the procedure the plans are evaluated by plans received in the resolution of the corporate data which is the company under insolvency then based on approval of COC the applications filed with the NCLT for its approval. So the time lag between COC approval and subsequent approval by NCLT is still very large.

In the list itself there are cases which were filed in 2018 and some of the resolution plan was filed in 2022. So time taken is still a challenge though number is okay but you will realise the value only if the plan is implemented in the shortest possible time. So if there is a lag of 300 400 500 days in the approval process itself so the cost becomes very high and the litigation cost also goes up.

That's why you will have to look at the both the figures take up in approval and number of plans approved.

Govindraj Ethiraj: Right so if you were to look at some of the real world examples including maybe clients that you have represented what happens when there is this kind of a delay I mean what has happened in this kind of delay?

Mukesh Chand: No we have handled both type of cases we are able to work banks lenders and as the corporate debtor in the insolvency processes. The concern of both the parties is that there should be faster realisation and resolution of the insolvency. So that's why the timeline was fixed based on the initial report of BLRC report the timeline for admission was fixed at 14 days and that completion of resolution plan was initially 180 days then subsequently it's 220 then later on the latest timeline is 320 days but because of cross litigation and many IAs have filed in interim applications filed before NCLT that this time lag is never realised is never maintained so that is first challenge. NCLT has broadly I think they have not been able to curtail this filing of IAS interim application which I think as per my assessment around 60 to 70 percent are meaningless and they are just filed to drag the matters and then delay the process.

The banks are interested in better realisation so there is another commercial aspect if you have a resolution plan approved for 100 crore and the final approval NCLT comes after 365 days so I as a banker have lost the interest for only this 100 crore for a period of one year so I have not been able to utilise this money which I would have would had the plan approved within a short span of to say one or two months and three months time.

See nine months time is my loss and beside that the cost of CRP the process is also going increasing as a banker I am ending up losing the time value of money as well as I have to bear the additional burden of cost litigation so these are the challenges which are faced and which bank and the stakeholder would like to be addressed

Govindraj Ethiraj: And you know some of these or maybe many of these cases we are talking about running manufacturing companies with let's say planted machinery which is operating salaries have to be paid so I'm assuming all of these delays cause bigger problems or escalate the problems which maybe leads to either closure or what happens I mean you know when things drag on for so long.

Mukesh Chand: There could be two types of cases, right? So there is default, but this solvent unit is functioning well, although there is default in paying to the creditors because that application has got admitted. So this unit is viable and functioning.

There could be another situation where the unit is not viable and is running at a very high loss level. There are a lot of losses happening in running the company.

In the second scenario, the ideal situation is that it should go to liquidation immediately, without wasting time in the insolvency process, because this company doesn't appear to be viable. But what happens? The Code requires that the insolvency professional would run the company as a going concern, to maintain the company as a going concern.

In the process, what happens? The cost of CIRP, including CIRP costs, includes the salary to be payable to the employees of the company, the cost incurred in running the company, so as to keep it as a going concern. Especially, the banks have to bear the cost. It goes with the delay. The longer it takes, the higher the cost will go. This cost would be the first to be realised after the resolution amount.

But these types of companies—I have seen one of the cases where the cost of running the company, or the CIRP cost itself, was around 80 percent of the resolution amount. So banks were to get only 15 to 20 percent of the resolution amount. Eighty to eighty-five percent of the amount has gone towards meeting the cost of running the company.

On the other hand, you have cases, if I can quote the Essar type of cases, where EBITDA was very, very healthy, and banks not only were able to realise their principal amount and interest, but they got this EBITDA also, which the company earned during the interim period from the CoC approval date till the final approval by the Supreme Court.

So each case will have to be taken into account in the light of its own situation. It's not that every case can be resolved under the IBC. There are cases which are better if they are sent to liquidation, like service sector entities, because there are no tangible assets there, and their value, especially if you take, for example, Jet or the airline industry, their basic strength is the customer base or the service they are providing.

So if you are not able to revive the company within a short span of, say, three months, four months, or five months, the customer will not wait for you to revive. Once I have lost faith in the company and in the operation of the company, I am no more interested in this company. Many of the rights that were available to the company have already gone. Those have been forfeited or have been assigned to some other operators.

The IBC, to a large extent, has been able to address the concerns of the lenders from the point of recovery because they were at the receiving end under the previous regime, under DRT, civil courts, and under BIFR also, because the promoters were dictating terms.

For the first time, banks have got a say in the process, as well as some limited control over the proceedings and, vastly, control over the outcome of the process.

So, for a bank, and for viable entities, the law is meant for these types of situations only, where the company has value and it can be revived.

Govindraj Ethiraj: Right Mr. Chand thank you so much for joining me