60 listed firms disclose ₹75,000 cr. default

SEBI had asked companies to disclose loan defaults at the end of every quarter

Anil Ambani Group companies such as Reliance Communications, Reliance Naval & Engineering, Reliance Infrastructure and Reliance Power have defaulted on loans totalling a little more than ₹43,800 crore as on Dec. 31, 2019

A directive by the Securities and 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 December 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 and Reliance Power have defaulted on loans totalling a little more than ₹43,800 crore as on December 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 and financial institutions along with unlisted debt securities such as non-convertible debentures (NCDs) and 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 and Bombay Rayon Fashions also feature in the first 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 and many of them would already be under various stages either in IBC or 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 November 2019, the capital market regulator mandated companies to disclose any default in the case of loans from banks and 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 and what has been disclosed is not some temporary default and 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 and present a consolidated report of all defaulters on their website for all investors to access,” added Mr. Gupta.