Essel Group run by Subhash Chandra is demanding extension to repay its debts in order to refrain its creditors liquidating its shares.
The company faces a month-end debt repayment deadline. If the company is unable to pay the debts in the given time, creditors can sell the shares in the group's flagship Zee Entertainment Enterprises Ltd. kept as collateral against loans.
This matter highlights extensive risks that borrowings backed by stock pose to the equity market. At present, there is a lot at stake with share-backed loans currently at about Rs. 1.9 lakh crore.
Mr. Subhash Chandra is striving to sell assets ranging from a stake in the nation's most valuable publicly traded TV network to roads. This is the first big challenge in a string of tests this year for beleaguered business titans from Anil Ambani to the founders of the Emami Group.