Care downgrades Srei cos’ ratings to ‘D’ on facilities worth Rs 29,240 crore

By: |
March 11, 2021 3:15 AM

The order further directed that rating agencies shall not consider any non-payment to be a default under the respective debt documents and shall maintain the ratings of Srei Equipment Finance at least at investment grade.

Of the total borrowings downgraded to ‘D’, Rs 17,412 crore are owed by Srei Equipment Finance and the rest by Srei Infrastructure Finance.Of the total borrowings downgraded to ‘D’, Rs 17,412 crore are owed by Srei Equipment Finance and the rest by Srei Infrastructure Finance.

Care Ratings has downgraded two Srei group companies to the default grade on facilities worth Rs 29,240 crore. The downgrade was made after the National Company Law Appellate Tribunal (NCLAT) in an interim order overruled part of a Kolkata tribunal order which restrained credit rating agencies from recognising defaults by the two companies.

Of the total borrowings downgraded to ‘D’, Rs 17,412 crore are owed by Srei Equipment Finance and the rest by Srei Infrastructure Finance.

According to Care’s rating rationale, Srei Equipment Finance, wholly owned subsidiary of Srei Infrastructure Finance, had approached the National Company Law Tribunal (NCLT), Kolkata, with a scheme of arrangement broadly proposing moratorium in terms of coupon payments during January 1, 2021 to June 30, 2021 along with postponement of redemption dates based on the type of creditor.

On December 30, the NCLT’s Kolkata bench passed an order stating that until the scheme is considered by the companies’ creditors and the tribunal and till further orders, the creditors shall maintain status quo with respect to their respective contractual terms, dues, claims and rights. They and all governmental or regulatory authorities were barred from taking any coercive steps against the company.

The order further directed that rating agencies shall not consider any non-payment to be a default under the respective debt documents and shall maintain the ratings of Srei Equipment Finance at least at investment grade.

In response to Care’s appeal against the NCLT order, the NCLAT on March 2 stayed the part of it pertaining to credit rating agencies till April 5, 2021. “Accordingly, CARE has now recognised default and ratings have been revised on account of ongoing delays in debt servicing obligations by the company,” the agency said.

Srei Infrastructure Finance informed the exchanges about the rating downgrade and described the action as wrong, misleading and baseless. “The rating agency has recognised default arbitrarily even though there’s or can be no default in terms of the order dated 30th December, 2020 passed by the Hon’ble National Company Law Tribunal, Kolkata Bench in an application filed under section 230 of the Companies Act, 2013 by Srei Equipment Finance Limited, material wholly owned subsidiary of the company,” the company said. It added that it is in the process of availing appropriate legal remedy, among others, to set aside the rating.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1HDFC Bank net up 18% on higher other income
2Jaypee Infratech insolvency: Lenders, homebuyers ask Suraksha group to improve bid
3NCLAT dismissed DVI plea over resolution plan for Amtek Auto