Anil Ambani led Reliance Group suffers massive setback as stocks fall over Reliance Communications default fears

Shares of lenders to Anil Ambani-controlled Reliance Group (ADAG) declined on Wednesday as group companies witnessed selloff amid concerns over default in interest payment by Reliance Communications (RCom), the group’s telecom unit. Among the lenders who have an exposure to RCom, the stock of Corporation Bank declined the most with a fall of close to 7%. It was followed by Dena Bank (down 3%), IDBI Bank (down 2.3%). Although the shares of Bank of Baroda ended the session in green, the stock had lost nearly 3% of its value during the day. Other lenders including State Bank of India, Punjab National Bank, Canara Bank, Bank of Maharashtra and IFCI also slid over 2% each during intra-day trade.

The consolidated debt of RCom stood at Rs 45,733 crore at the end of March 2017, whereas Reliance Power and Reliance Infra have a gross debt to the tune of Rs 29,935 and Rs 25,820 crore respectively, Bloomberg data show. According to a Bloomberg report, RCom defaulted on a coupon payment on its 2020 dollar notes before the expiry of a grace period on Monday. Earleir, the company had missed interest payments due on November 2 and November 7 on two rupee-denominated bonds. However, in an exchange filing, the company reiterated that a standstill period for interest and principal repayments continues until December 2018 under the strategic debt restructuring (SDR) plan.

“For the time being, no payment of interest and/or principal is being made to any lenders and/or bondholders of RCOM,” the filing said. Rcom reported a wider loss of Rs 2,709 crore in the quarter-ended September 2017 compared to a loss of Rs 1,210 crore in the previous quarter. Among the Reliance Group companies, the stock of RCom plunged as much as 12.1% and hit a fresh all-time low of Rs 10.15 on the BSE. Other group companies – Reliance Capital, Reliance Home Finance, Reliance Nippon Life Asset Management and Reliance Power – were down in the range of 7% and 10%.

Reliance Communications (RCOM)