Anil Ambani-led Reliance Capital has defaulted on interest payments on loans worth Rs 624 crore drawn from Housing Development Finance Corporation (HDFC) and Axis Bank, the company informed stock exchanges on November 27, 2020.
The company has defaulted on Rs 4.77 crore to HDFC and Rs 0.71 crore to Axis in in terms of interest payment as on October 31.
Reliance capital borrowed term loans from HDFC for a period of six months to seven years at 10.6 per cent -13 per cent and from Axis at 3-7 years for 8.25 per cent.
In the stock exchange clarification, the company said it is unable to proceed with asset monetisation due to prohibition on the Company to dispose off any assets following court orders. Hence, the delay in debt servicing, it said.
"Kindly note that the Company is unable to proceed with asset monetisation resulting in delay in debt servicing, due to prohibition on the Company to dispose off, alienate, encumber either directly or indirectly or otherwise part with the possession,of any assets except in the ordinary course of business such as payment of salary and statutory dues, pursuant to Order dated November 20, 2019 passed by the Hon’ble Delhi High Court, and Orders dated December 3, 2019 and December 5, 2019 passed by the Hon’ble Debts Recovery Tribunal, Mumbai and Order dated November 4, 2020 passed by the Hon’ble Bombay High Court," the company said in a note to exchanges.
For the September quarter, Reliance Capital reported a huge jump in net losses to Rs 2,577 crore compared with a net loss of Rs 96 crore in the quarter ended September a year ago.
Total consolidated income fell to Rs 4,929 crore in July-September period of 2020-21 from Rs 5,064 crore in the year-ago quarter, Reliance Capital said in a regulatory filing. Total expenses at Rs 7,183 crore exceeded its income during the quarter. The expenses stood at Rs 9,042 crore in the corresponding quarter of last year.
"The parent company has defaulted in repayment of obligation to the lenders and debenture holders and has incurred losses during the period, which indicate material uncertainty exists that may cast a significant doubt on the company’s ability to continue as a going concern,” Reliance Capital said while announcing the Q2 results.
Further, it said the company is in the process of meeting its obligations by way of time-bound monetisation of its assets in cognizance with debenture trustee (Vistra) and debenture holders. The committee of debenture holders have sought expression of interest (EoI) for submission of asset monetisation plans for certain subsidiaries/investments of the company, it said.
The invitation for this EoI has been issued on October 31, 2020 and the financial results of the company have been prepared on a "going concern" basis, it added. The company is engaged in finance and investment activities, life and general insurance, commercial finance, home finance and other financing business.