NBFC crisis and indiscriminate borrowing to beef up its subsidiaries is at the root of Reliance Capital’s crisis.
The liquidity crisis that is roiling non-banking finance companies (NBFCs) has hit the one part of Anil Ambani’s debt-strapped business empire that was going strong — its financial services business. Three rating agencies – CARE, ICRA and Brickwork – have downgraded the borrowings of Reliance Capital (RCap) and its subsidiaries. The debt crisis, which had overtaken the Reliance Group’s telecom, power distribution and media businesses earlier, had an immediate effect on RCap shares, which fell from 184.05 on April 15 to 132.85 on April 30. They have since dropped further to 121.15 (May 7).
CARE lowered the rating of some of RCap’s debt instruments to ‘D’, which means the debt facility is either in default or is expected to be so soon. “The rating revision takes into account the recent instance of rescheduling of non-convertible debentures, and delays in servicing of bank facilities by the company,” said CARE.
ICRA pointed out that the repayment amount of two of RCap’s subsidiaries, Reliance Commercial Finance (RCFL) and Reliance Home Finance (RHFL), was going to be higher than their cash inflows in the next six months. This means the subsidiaries will have to get capital from elsewhere or they will fail to meet their repayment obligations.
Brickwork’s revision of RCap’s long-term rating placed it on “credit watch with negative implications”.
How did RCap’s debts reach such an unmanageable position? No doubt, RCap – which has called ICRA’s step “unjustified and unwarranted” – is not alone. The entire NBFC sector has been in crisis following the IL&FS crash late last year. But RCap is also paying the price of excessive ambition.
Denne historien er fra June 02, 2019-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent ? Logg på
Denne historien er fra June 02, 2019-utgaven av Business Today.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
Allerede abonnent? Logg på
"Moving to cloud helped us grow❞
What was the problem you were grappling with?
She's Got Time
MORE WOMEN ARE BECOMING WATCH CONNOISSEURS, SEEKING OUT BOTH JEWELLED AND TECHNICAL WATCHES FOR THEIR STYLE AND CRAFTSMANSHIP
RISING STAR
PARUL GULATI IS a name that's been steadily gaining prominence in the Indian entertainment industry after she appeared on season 2 of Shark Tank in 2023. She has become a multifaceted personality who effortlessly transitions between acting and entrepreneurship.
Building on a Legacy
WHEN ZAHABIYA KHORAKIWALA stepped into her role as Managing Director of Wockhardt Hospitals over a decade ago, she confronted formidable challenges that have since turned into achievements.
LEADER IN INNOVATION
AS FEDEX'S PRESIDENT (Middle East, Indian subcontinent and Africa), Kami Viswanathan has a lot on her plate.
WAITING IN THE WINGS
Here are those who missed out as they have not yet completed a year in office; they'll be strong contenders in 2025
A DECENT PROPOSAL
IN TODAY'S WORLD OF TRYING TO CREATE AN EQUITABLE SPACE, BOTH MEN AND WOMEN CONTRIBUTE TO THEIR HOUSEHOLDS. WOMEN ARE ENCOURAGED TO HAVE THEIR OWN SAVINGS POOL AND INVESTMENT ROUTINE. GIVEN THIS, HOW SHOULD FUTURE BRIDES APPROACH FINANCIAL PLANNING?
Women and the STEM Bias
EMPOWERING WOMEN IN STEM WILL NOT ONLY BENEFIT INDIVIDUALS, BUT ALSO STRENGTHEN THE ENTIRE INDUSTRY, DRIVING INNOVATION AND PROGRESS.
ROCKET WOMEN
WOMEN IN INDIA ARE NOT ONLY VENTURING INTO SPACE BUT ARE ALSO STARTING TO SPEARHEAD THE COUNTRY'S EFFORTS IN THE GLOBAL SPACE RACE.
ONE STEP FORWARD
THE NUMBER OF WOMEN INDEPENDENT DIRECTORS IS GROWING STEADILY, BUT IT'S A LONG WAY FROM GENDER PARITY. MUCH MORE NEEDS TO BE DONE TO BREAK THE GLASS CEILING IN BOARDROOMS.