Reliance Capital defaults on payment to bondholders

Reliance Capital has been missing monthly interest payment of Rs 4.77 crore to HDFC and Rs 71 lakh to Axis Bank.

Reliance Capital has failed to make interest payment for non-convertible debentures (NCDs) due on April 22, as per its disclosure to stock exchanges. Although the quantum of default could not be ascertained, the company had disclosed during its December quarter (Q3FY21) earnings that it had listed NCDs worth `14,827 crore. Reliance Capital had earlier invited expressions of interest (EoIs) for its key assets. 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.

“The company is unable to proceed with asset monetisation due to prohibition on the company to dispose of, 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,” Reliance Capital said in a disclosure to stock exchanges.

The troubled company has also missed 12 instalments to HDFC and Axis Bank between January 2020 and March 2021. Reliance Capital has been missing monthly interest payment of Rs 4.77 crore to HDFC and Rs 71 lakh to Axis Bank. The lender had taken a loan of Rs 524 crore from HDFC and Rs 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 Rs 711 crore. However, the total financial indebtedness of Reliance Capital remained at Rs 20,643 crore as on February 28, 2021.

The net loss of Reliance Capital had 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.