Anil Ambani firms hammered as RCom fails on interest payments

Stocks of all Anil Dhirubhai Ambani Group (ADAG) companies took a hammering on Wednesday after telecom firm Reliance Communications (RCom) defaulted on interest payment.

The seven listed companies of the group fell by up to 12 per cent as investors feared a spill-over of the RCom crisis to other group firms. RCom, which has failed to pay a coupon on its 2020 dollar notes, has seen its share price erode by 41 per cent this month and 70 per cent in 2017.

Newly-listed Reliance Nippon Asset Management, the group's most valued company, fell seven per cent and briefly even slipped below its initial public offering price.

Reliance Capital tanked 10.21 per cent and Reliance Infrastructure tumbled 9.16 per cent on the BSE. Reliance Power plunged 8.55 per cent, Reliance Naval and Engineering fell 8.18 per cent, and Reliance Home Finance was down 7.09 per cent.

Reliance Communications posted a fourth straight quarterly loss late on Saturday and said it was unable to pay interest on some debentures, following which its shares plunged 14 per cent to settle at a record low.

The telco reported a quarterly loss of Rs2,709 crore compared with a profit of Rs62 crore a year ago. Revenue nearly halved to Rs2,667 crore, amid the relentless price war launched by rival Reliance Jio, which is backed by Anil's elder brother Mukesh Ambani. Brokers said the scare over RCom spread to other group firms as well and triggered the dumping of stocks.

RCom also said in a securities filing over the weekend that it has missed interest payments on two outstanding domestic non-convertible debentures.

Once the second largest telecom company, RCom is now struggling under a Rs49,000 crore debt burden.

RCom, which is on the verge of shutting its voice call service, witnessed a decline in revenue from both its India and global operations.

Reliance Communications said on Wednesday that it is not making any payment to lenders or bond-holders for the time being as it is under a 'standstill period' with a strategic debt restructuring scheme and working on asset-monetisation.

In a regulatory filing, the telecom operator said that is in standstill period till December 2018 pursuant to the SDR (Strategic Debt Restructuring) guidelines. The company has also announced various asset sales and a comprehensive debt resolution plan.

Accordingly, for the time being, no payment of interest and/or principal is being made to any lenders and / or bondholders of RCom, the company said in a BSE filing. The filing was in response to query of the stock exchange on report around RCom defaulting on payment of a US dollar bond.

The company has been trying to sell its assets in the infrastructure sector to trim its huge debt burden and focus on the new defence manufacturing business.

Following Wednesday's carnage, the combined market capitalisation of all Anil Ambani group companies stood at Rs55,790 crore, less than half the debt of Rs1.18 lakh crore at the end of March.

Ambani is banking on asset sales across verticals to ease the loan payment burden. In recent months, the group has sold its multiplex and radio businesses. It has also monetised stake in e-wallet and e-commerce company Paytm.

RCom has assets such as an undersea cable, a data solution centre, mobile towers and spectrum.