Reliance group companies also closed lower. Reliance Infrastructure Ltd declined 10.84%, Reliance Defence 5.15%, Reliance Capital 8.99%, Reliance Power 8.27%
Reliance Communications saw its shares and bonds plunge on Monday after it posted a fiscal fourth-quarter loss and its first-ever full-year loss over the weekend, sparking renewed fear about its heavy debt load. The company slipped as much as 21 percent in morning trade on Monday after the telecom major posted its first-year loss since its inception of Rs 1,285 crore for fiscal gone by compared to a net profit of Rs 660 crore.
The stock closed at Rs 20.50, down Rs 5.30, or 20.54 percent. It touched a 52-week low of Rs 19.70.
The telecom operator posted a consolidated net loss of Rs966 crore for the fiscal ended fourth quarter compared to a net profit of Rs90 crore in the same period last year.
“For the first time in over 20 years, the telecom sector registered de-growth in revenues, leading to a reduction in the Government’s share in revenues, sharp drop in operating margins, accompanied by increased interest costs arising from a staggering industry debt burden, and higher depreciation and amortisation charges as a result of higher spectrum purchase costs,” said the company in its statement.
Total income for the company in the fourth quarter of FY17 was Rs 4524 crore compared to Rs 5980 crore when compared on a like to like basis.
In a separate report, as much as 10 banks have raised a red flag on RComm. The debt situation is more serious than what credit rating agencies believe.
“The Anil Ambani-owned mobile phone operator has defaulted on its loan servicing obligations with more than 10 local banks, some of whom have categorised the exposure as “special mention account” in their asset books,” said an ET report.
Reliance Communication has been under pressure for the past two weeks after CARE and ICRA downgraded ratings of the telecom operator’s bonds due to the pressure the telco faces in Indian telecom market and its debt obligation.
The telecom operator had a debt of around Rs42,000 crore as on March 31, but it has missed payments recently which has sparked fresh concerns for the stock.
Special mention accounts or SMA assets are loans where the interest payment from a borrower is overdue. If a loan isn’t serviced within 30 days after falling due, it’s marked as SMA 1 and if unpaid for 60 days or more, it’s classified as SMA 2.
The loan becomes a non-performing asset (NPA) – which requires a bank to provide for the loan and take a knock on profitability – if interest is unpaid for 90 days.
Source: money control