Reliance Capital slams CARE Ratings for downgrading its debt program

Anil Ambani-led Reliance Capital has slammed CARE Ratings for downgrading its debt and called actions by the rating agency "pre-meditated and prejudiced".

Reliance Capital said there was a delay in payment of interest for non-convertible debentures (NCDs) due to a technical glitch and the payment was made on the next working date.

The company said interest payment for NCDs due on September 9, 2019, could not go through due to technical glitch in bank servers on that date, and the payment was cleared on the very next bank working day which is September 11, 2019.

CARE on Friday downgraded rating for the company's long-term debt program, market-linked debentures and subordinated debt to CARE D, due to the alleged "delay" in payment of interest by one day.

"CARE has arbitrarily disregarded the above confirmation provided by third party independent parties that established the alleged delay was on account of technical glitch in bank servers, while funds had duly been arranged on the due date," Reliance Capital said in a statement.

Reliance Capital said CARE has acted in a pre-meditated and prejudiced manner, and has even suppressed the above facts completely in its rating action letter, thereby making it appear as if the company had defaulted in payment of interest by a day, whereas the reality is documents had been provided to CARE that proved funds had duly been arranged on the due date, and the alleged delay was on account of technical glitches.

"CARE did not even give the company an opportunity to provide comments on the rating action rationale as published. CARE's pre-meditated and prejudiced actions are further borne out by the manner in which it conducted the Sebi prescribed review process," the company added.

Reliance Capital said despite the company making a specific request in writing for a meeting with the review committee, and despite having allowed such meetings in the past, CARE did not allow the same in this instance, and went ahead and unilaterally completed the alleged review upholding the proposed rating action in the company's absence.

CARE is functioning without a CEO as the previous CEO was sent on leave. The acting CEO was on vacation and refused to be engaged, Reliance Capital said.

The highly unprofessional, biased and prejudiced and unjustified actions of CARE will precipitate a chain sequence of events that will gravely harm the interests of millions of retail and institutional investors having direct and indirect exposure to securities of the company, it added.

Shares of Reliance Capital were trading 7.34 per cent lower at Rs 29.05 apiece on BSE.