Care Ratings has downgraded Srei group’s debt totalling ₹29,240.3 crore to “default”. The National Company Law Appellate Tribunal (NCLAT) had earlier temporarily removed a restriction placed by a lower tribunal on changing the Kolkata-based group’s credit ratings.
The ratings agency has now classified Srei Equipment Finance Ltd’s debt of ₹17,411.96 crore, and Srei Infrastructure Finance Ltd’s ₹11,828.34 in the ‘D’ category indicating default.
In December, the National Company Law Tribunal (NCLT) granted Srei group a moratorium on repayments from 1 January to 30 June. Under a scheme of arrangement, the company has proposed to make repayments to various categories of debenture holders over an extended period. While retail investors will get their interest accrued during the moratorium period within 15 days of it ending, many say that they don’t have the financial wherewithal to wait that till then.
“…NCLAT, New Delhi has passed an interim order dated 2 March and has stayed the last sentence of impugned provision of para 34 of the National Company Law Tribunal (NCLT) order pertaining to credit rating agencies, till 5 April. Accordingly, Care has now recognized default and ratings have been revised on account of ongoing delays in servicing of debt obligations by the company,” the rating agency said.
Meanwhile, the NCLAT will hear on 23 March a case filed by Srei group’s bondholders challenging the Kolkata NCLT order. The non-bank financier missed repayments on eight instances between 11 January and 15 February, showed data. Debenture trustees Axis Trustee Services Ltd and Catalyst Trusteeship Ltd which represent bondholders have jointly moved NCLAT against the NCLT order, which has impacted retail and institutional investors alike. Apart from bank loans, Srei is estimated to have outstanding market-linked debt instruments worth ₹1,210.08 crore, including money put in by retail investors, according to data from Care Ratings.
Srei Infrastructure Finance said in a regulatory filing on 6 March that it believes the rating is “blatantly wrong, misleading and baseless”. “The company is in the process of availing appropriate legal remedy, among others, to set aside the rating since the company believes that the rating agency has acted in a wrongful and contumacious manner,” the statement added.
