Religare Enterprises skids 3% as arm defaults on interest payments

NEW DELHI – Shares of Religare Enterprises tumbled 3 per cent in early trade on Monday as its subsidiary Religare Finvest defaulted on interest payment to bond holders due on February 25 due to asset liability mismatch, said to arise out of siphoning and misappropriation of funds by erstwhile promoters of its parent company.

Religare Enterprises’ share price skid to a low of Rs 121.35 on the National Stock Exchange as against the previous close of Rs 125.25.

RFL, a subsidiary of Religare Enterprises Ltd (REL), was put under the Corrective Action Plan (CAP) by the Reserve Bank of India in January 2018 due to issues emanating from siphoning and misappropriation of funds by erstwhile promoters of REL and their associates, PTI reported.

“Due to these reasons, the company faced significant asset liability mismatches,” REL said in a regulatory filing, according to PTI’s report.

The company said RFL defaulted on interest payment for an amount of Rs 96,00,000 towards non-convertible debentures due on February 25, 2022, the report said.

The company said there are two investors in the security on which the default has been reported, PTI reported, adding that the bonds, with tenure of 10 years were issued on private placement basis of Rs 10,00,000/- each for cash at par for up to Rs 8 crore on February 25, 2013, and carry coupon at 12 per cent per annum.

A debt resolution plan (DRP) was submitted to the lenders by RFL with TCG as an investor, in order to address the asset liability mismatch.

“However, the same was not acceded to by RBI as per the letter received in March 2020. The company, to revive its business and to ensure proper alignment of its asset liability profile, submitted a revised DRP with REL continuing as promoter/shareholder of RFL ),” the company was quoted as saying in reports.