Reliance Capital defaults for 49th time on non-convertible debentures payments

Mumbai: Reliance Capital has once again failed to make interest payment for non-convertible debentures (NCDs) due on February 21. Although the quantum of default could not be ascertained, it will be at least the 49th default in a row for Reliance Capital.

The company had disclosed during its December quarter (Q3FY21) earnings that it had listed NCDs worth Rs 14,827 crore. As the asset cover of the outstanding debentures had fallen below 100%, the company was in discussion with bidders for asset monetisation. Reliance Capital had earlier invited expressions of interest (EoIs) for its key assets. However, no final deal has been reached so far with the resolution applicants.

The company has also missed 11 instalments of HDFC and Axis Bank from January 31, 2020 to January 30 this year. The company has been missing monthly interest payment of `4.77 crore to HDFC and `71 lakh to Axis Bank. The non-bank lender had taken a loan of `524 crore from HDFC and `101 crore from Axis Bank. While HDFC charged interest rates between 10.6% and 13%, Axis Bank had extended the loan to Reliance Capital at 8.25% per annum. Reliance Capital’s total outstanding from banks and financial institutions stood at `706 crore. However, the total financial indebtedness of Reliance Capital remained at Rs 20,511 crore as on January 31, 2021.

The net loss of Reliance Capital has widened to Rs 4,018 crore in the December quarter (Q3FY21), against a net loss of Rs 135 crore in the same period a year ago. The expenses of the company almost doubled to Rs 8,662 crore, compared to Rs 4,731 crore last year. The interest income of the company halved to Rs 684 crore, compared to Rs 1,400 crore in December 2019.

Reliance Capital has cautioned investors that there would be a delay in debt servicing. “It is expected that the debt servicing of the company in relation to the accelerated amounts and otherwise will be delayed,” Reliance Capital said. The company has cited legal hurdles for not being able to proceed with its asset monetisation, which, in turn, resulted in a delay in the debt servicing.

In September 2019, Care Ratings had downgraded Reliance Capital’s Rs 17,000-crore debt to default grade ‘D’. The agency attributed its action to the company delaying by a day its payment on several non-convertible debentures (NCDs) it had issued.