Shares of billionaire Anil Ambani-controlled Reliance Naval and Engineering (RNaval) Ltd crashed 5%, maximum permissible limit, on Friday after the Mumbai-based PSU lender IDBI Bank moved to the NCLT (National Company Law Tribunal) to recover loan amount under IBC process. According to a CNBC TV18 report, Reliance Naval and Engineering has offered to a one-time settlement to the respective lenders to keep the company out of NCLT proceedings. Following the development, Reliance Naval and Engineering share price fell as much as 4.95% to Rs 15.35 on BSE on Friday, 7 September 2018.
Reliance Naval and Engineering has a debt of Rs 6,000 crore (approx) to an IDBI Bank-led consortium and is the proposed settlement offer is not accepted by lenders, Reliance Naval and Engineering will be transferred to NCLT for insolvency proceedings, CNBC TV18 report said. Shares of Reliance Naval and Engineering were the top losers among the 500 stocks of NSE Nifty 500 index on Friday. According to a PTI report, Reliance Naval and Engineering owes over Rs 9,000 crore to more than two dozen banks, mostly PSU banks, led by IDBI Bank.
“The company has been informed that IDBI Bank Ltd, a lender of the company, has filed an application before the National Company Law Tribunal (NCLT), Ahmedabad, seeking debt resolution under the IBC process, in compliance with circular dated February 12, 2018, issued by the Reserve Bank of India,” Reliance Naval and Engineering said in a regulatory filing on 6 September. IFCI Ltd, another lender of the company had also filed the similar application in November 2017, which is pending since last 10 months for admission, Reliance Naval said further.
Reliance Naval’s settlement offer includes 10% debt repayment upfront to the lenders, including repayment of another 40% of over long-term liabilities via various instruments, including equity, CRPS (Convertible Redeemable Preference Shares), CNBC TV18 report said further. Reliance Naval’s promoters have offered to take over Rs 1,350 crore of company’s guarantee, Rs 1,000 crore as cash repayment upfront as a part of the settlement, Rs 300 crore as other repayments and conversions of remaining into equity and CRPS, the report added.
Reliance Naval and Engineering shares have fallen as much as 67% from a share price level of Rs 49.3 as of 29 December 2018. Earlier this year, BSE and NSE have put Reliance Naval shares under ASM (Additional Surveillance Measure) with regard to suspected price volume manipulation in the share prices while the circuit limits were revised to 5% from 20% after the company’s Q4 FY18 net loss widened nearly to three-fold to Rs 408.6 crore. While for the April-June period of FY19, Reliance Naval reported a net loss of Rs 347.21 crore.
Reliance Naval and Engineering Ltd, earlier known as Pipapav Defence and Offshore Engineering, was bought by Anil Dhirubhai Ambani Group (ADAG) in 2016 and was renamed as Reliance Defence and Engineering Ltd. Reliance Naval and Engineering Ltd is the first private sector company in India to obtain the licence and contract to build warships, PTI said in a report.