‘Debt restructuring proposal with CoC’
With three of the four Religare Group entities having achieved turnaround since 2018, Religare Finvest Ltd. — the NBFC arm of listed holding firm Religare Enterprises Ltd. (REL) — is heading for a resolution in two quarters, a top company executive said.
The resolution of this hardest hit of the Religare group’s firms includes debt restructuring, roping in a new investor, and recovering substantial dues from the erstwhile promoters Malvinder and Shivinder Mohan Singh, who had allegedly siphoned off funds and are currently in jail.
“The debt restructuring proposal of ₹4,000 crore loan is currently with the committee of creditors for REL, and it is expected to get approval soon,” said Nitin Aggarwal, Group CFO, REL. “We are also close to getting a strategic investor with the approval of the regulator. Talks with a few investors are proceeding positively and resolution is expected in two quarters,” he said.
In March this year, TCG Advisory Pvt. Ltd., a part of The Chatterjee Group, was selected to pick up equity stake in Religare Finvest but the RBI rejected the proposal as it was not found to be ‘fit and proper’.
Religare Finvest, which was into SME financing with a peak loan book of ₹16,000 crore, has been passing through difficult times on account of alleged mismanagement and misappropriation of funds by the erstwhile promoters.
“Religare has been a victim of fraud as a lot of funds had been moved out of the companies. Different probes have established criminality and the accused are in judicial custody. He are hopeful of a recovery,” Mr. Aggarwal added.
The RBI had placed Religare under a Corrective Action Plan (CAP) in January 2018 and restrained it from expanding its credit portfolio. Despite this, the company had repaid close to ₹5,600 crore to banks till December 2019.
“The debt restructuring and the induction of a new investor, when approved, will put the company back on track. We have made claims to recover ₹3,000 crore from the erstwhile promoters and others,” Mr. Aggarwal asserted.
He said REL had cleared its external debt of ₹300 crore and an equal amount of internal debt should be cleared shortly.
He added that the group’s health insurance and stock broking businesses were on the upswing.
Religare Health Insurance Company Ltd. (RHICL), its healthcare insurance business, concluded a deal with Kedaara Capital, wherein the private equity major picked up over 6% stake in RHICL and pumped in a total of ₹567 crore, including ₹300 crore of growth capital.
After this capital raise, its solvency ratio is more than 2.5 times, which is sufficient to take care of more than 2-3 years of growth, Mr. Aggarwal said.
Religare Broking Ltd., earlier facing liquidity and working capital issues, has started growing in FY20-21, he said, adding Religare Housing Development Finance Company Ltd., which is a division of Religare Finvest, though grappling with liquidity issues earlier, had achieved comfortable debt to equity ratio and there was headroom for equity expansion.
At the group level, REL has undergone a complete change in shareholding pattern, and the board now consists of independent directors with Dr. Rashmi Saluja running the group as its chairperson.
EL is now a professionally-managed, board-driven organisation with no investor holding more than 10% stake. The holding of Singh Brothers has come down from about 50% to 0.88% now.
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