Religare Enterprises on Wednesday reported narrowing of its consolidated net loss to Rs 115.24 crore for the quarter ended September.
The company had posted net loss of Rs 205.81 crore in the same quarter a year-ago. Sequentially, the loss narrowed from Rs 182.75 crore loss in the first quarter of this fiscal.
Total income of the company rose a tad to Rs 640.18 crore in the July-September quarter of 2020-21 from Rs 635.18 crore in the same period of 2019-20, Religare Enterprises (REL) said in a regulatory filing.
Interest income dropped to Rs 147.09 crore from Rs 170.52 crore. However, income from other sources was up by 6.3 per cent to Rs 421.87 crore as against Rs 396.76 crore earlier.
The COVID-19 pandemic has impacted the business operations of subsidiaries engaged in lending -- Religare Finvest Ltd (RFL), Religare Housing Development Corporation Finance Ltd (RHDFCL) and health insurance subsidiary Care Health Insurance Ltd, it said.
Apart from other adverse effects, the pandemic has put constraints on recovery of overdues from customers of RFL and RHDFCL.
The company, being a Core Investment Company (CIC), has invested its funds primarily in money market instruments and inter corporate loan to its subsidiaries.
Hence, temporary market shocks (such as those due to pandemics like COVID-19) are not considered to have a material impact on the carrying value of these investments of the company on standalone basis, it added.
Besides, Religare said RFL has an exposure of Rs 2,036.70 crore as at September 30, 2020 towards the corporate loan book.
"RBI has raised concerns in the past about the credit worthiness of the borrowers, credit appraisal and loan sanctioning mechanism followed by RFL in respect of this book.
"Based on the maturity dates of the loans, recovery steps instituted and the financial reports of the borrowers, RFL had, on a prudent basis, made full provision of Rs 203,670 lakh during the previous years against this portfolio," it said.
Accordingly, no further financial implications are expected on RFL.
Insolvency proceedings have been initiated before the NCLT Delhi and Kolkata against the borrowers forming a part of the corporate loan book.
The company, RFL and RCTL (Religare Comtrade Limited) have filed petitions in NCLT for recovery of corporate loans, it said further.
"In the matter of Daiichi Sankyo Company Limited vs. Malvinder Mohan Singh & Others, an interim application has been filed by the company disputing its liability as a garnishee. The company has not redeemed 1,500,000 preference shares due for redemption on October 31, 2018 and disputed the liability stating the transaction to be an illegal one.
"The company has also filed a petition in NCLT, Delhi under Companies Act, 2013 seeking rectification of Register of Members of the Company w.r.t. 250 lakh preference shares issued by the company to RHC Finance Private Limited in August 2016. The matter is sub-judice," it added.
The Supreme Court is hearing contempt proceedings against the Singh brothers (Malvinder and Shivinder) for allegedly violating Delhi High Court orders and selling their stake in Fortis Healthcare Limited.
The apex court has injuncted NCLT from admitting the Insolvency and Bankruptcy Code (IBC) cases. Now, RFL, REL and RCTL are impleaded as a party in the said proceedings, the company said further.
Among others, it said the capital to risk weighted assets ratio (CRAR) of RFL as on September 30, 2020 is below the prescribed limit. It was asked by RBI in January 2018 to adhere to corrective action plan given by the central bank.
"In this regard, RFL is taking the necessary corrective measures as advised by RBI and will seek removal of cap in the due course," it said.
On the matter related with private sector Lakshmi Vilas Bank, it said RFL had filed a suit for recovery of fixed deposits amounting to Rs 791.45 crore misappropriated by the lender on May 31, 2018 before the Delhi High Court that passed interim orders directing that status quo be maintained in respect of RFL's current account maintained with LVB.
The matter is sub-judice, it added.
REL stock closed 1.08 per cent up at Rs 51.45 apiece on BSE.
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