Shares of Fortis Healthcare and Religare fell up to 12% after India Ratings downgraded the holding company’s NCDs (non-convertible debentures) citing default on interest payments. The stocks of Fortis Healthcare Ltd and Religare Enterprises Ltd fell as much as 12.8% and 8.9%, respectively. So far this year the stocks of Religare Enterprises and Fortis Healthcare have declined 56% and 16%, respectively. RHC Holding and Oscar Investments Ltd jointly owns financial services firm Religare Enterprises Ltd and healthcare service provider Fortis Healthcare Ltd.
India Ratings and Research downgraded some non-convertible debentures (NCDs) and loans held by RHC Holding Pvt Ltd (RHC), which owns shares in Fortis and Religare, to default levels of “IND D” and “IND C”. Previously the credit rating agency had a rating of “IND A” for some of RHC’s NCDs and loans, while others were unrated. The rating agency said that RHC defaulted on coupon obligations for NCDs which was due on June 27, amounting to the principal of Rs 200 crore.
“The downgrade of ratings on other debt instruments reflects an impaired debt servicing capability due to a stretched liquidity position,” said India Ratings & Research. Post the default, RHC Holding has been given a new future date in July to make the payment. RHC has been unable to meet its planned deleveraging target through the monetisation of non-core assets, as envisaged earlier.
As of March 2017, Religare Enterprises had a total consolidated debt of Rs 11,075.25 crore, while Fortis Healthcare has a debt of Rs1,961.30 crore.
RHC and Oscar Investments Limited (Oscar) face a total contingent liability of about Rs 3,500 towards an adverse verdict by a Singapore-based appellate tribunal on a lawsuit filed by Daiichi Sankyo Company Limited against selling shareholders (i.e. RHC and Oscar) of Ranbaxy Limited, added India Ratings & Research. RHC was incorporated in 2007 as Solaries Finance Pvt. Ltd. It was renamed in November 2008. RHC is a closely held investment company, held by Mr Malvinder Mohan Singh and Mr Shivinder Mohan Singh.