A directive by the Securities & Exchange Board of India (SEBI) for companies to disclose loan defaults at the end of every quarter has led to almost 60 listed entities disclosing a cumulative default amount of almost ₹75,000 crore as on Dec 31.
More importantly, there are nine companies that have defaulted on loans worth more than ₹1,000 crore each even as bulk of the overall default amount pertains to companies belonging to the Anil Ambani Group.
As per stock exchange disclosures, Anil Ambani Group companies such as Reliance Communications, Reliance Naval & Engineering, Reliance Infrastructure & Reliance Power have defaulted on loans totalling a little more than ₹43,800 crore as on Dec 31, 2019.
Within the group, Reliance Communications accounts for a chunk of the portion at ₹32,575 crore.
The default amount includes both loans from banks & financial institutions along with unlisted debt securities such as non-convertible debentures (NCDs) & non- convertible redeemable preference shares (NCRPS).
Other names
Apart from these entities, well-known names like Suzlon Energy, Jaypee Infratech, Ansal Housing, Aban Offshore, ISMT, Religare Enterprises, Bedmutha Industries, Hindustan Construction & Bombay Rayon Fashions also feature in the 1st list of such defaulters.
“The information itself is not as startling as one should make it out to be as these are names of companies which have been down under for quite some time & many of them would already be under various stages either in Insolvency and Bankruptcy Code, 2016 (IBC) or National Company Law Tribunal (NCLT),” said Arun Kejriwal of Kejriwal Research & Investment Services.
“Going forward, when this list appears every quarter, it would be interesting to observe any new entrants during the quarter, which should raise the alarm bells.” he added. In Nov 2019, the capital market regulator mandated companies to disclose any default in the case of loans from banks & financial institutions wherein the default continued beyond 30 days.
Further, such disclosures have to be made within seven days from the end of every quarter.
Interestingly, experts are of the view that since such disclosures will be made every quarter, exchanges should endeavour to present a consolidated list of such defaulters for the benefit of the investor community.
“Default is a price-sensitive information & what has been disclosed is not some temporary default & hence, investors need to be informed so that they can take better informed decision in terms of investing,” said J. N. Gupta, founder, Stakeholder Empowerment Services, a proxy advisory firm.
“However, since this information will be disseminated after every quarter, exchanges should compile a list & present a consolidated report of all defaulters on their website for all investors to access,” added Mr. Gupta.
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