By Siddharth Goel

India Ratings and Research (Ind-Ra) has undertaken the following rating actions on RHC Holding Private Limited’s (RHC) non-convertible debentures (NCDs) and bank loans:

Instrument Type

Date of Issuance

Coupon Rate

Maturity Date

Size of Issue (million)

Rating

Rating Action

Secured long-term NCDs

-

-

-

INR2,000 (reduced from INR3,000)

IND D

Downgraded

Secured long-term NCDs

-

-

-

INR500

IND C; WD

Downgraded; Withdrawn (paid in full)

Secured long-term bank loans

-

-

-

INR750 (reduced from INR1,500)

IND C

Downgraded

Secured short-term bank loans

-

-

-

INR2,500

IND A4; WD

Downgraded;  Withdrawn (paid in full)

KEY RATING DRIVERS

Default in Debt Service: The downgrade reflects a default by RHC in servicing its coupon obligations on its non-convertible debentures. The obligations were due on 27 June 2017. Post the default, RHC has been given a new future date in July 2017 to make the payment. The outstanding principal amount stands at INR2 billion for this issue. The downgrade of the ratings on other debt instruments reflects an impaired debt servicing capability due to a stretched liquidity position.

 

Slow Movement Towards Targeted Debt Reduction: RHC has been unable to meet its planned deleveraging target through the monetisation of non-core assets, as envisaged earlier. However, the company has been able to reduce debt to INR29.5 billion at FYE17 from INR41.3 billion at FYE16 through the sale of some stake in its subsidiary Fortis Healthcare Limited (FHL).

 

Uncertainty About Payout Towards Arbitration Award: RHC and Oscar Investments Limited (Oscar) face a total contingent liability of about INR35 billion towards an adverse verdict by a Singapore-based appellate tribunal on a lawsuit filed by Daiichi Sankyo Company Limited against selling shareholders (i.e. RHC and Oscar) of Ranbaxy Limited. RHC and Oscar have challenged the order in Indian courts. An adverse outcome in Indian courts may further worsen the impact on the liquidity situation of the group.


RATING SENSITIVITIES

Positive: Timely debt servicing for at least three consecutive months could result in a positive rating action.


COMPANY PROFILE

RHC was incorporated in 2007 as Solaries Finance Pvt. Ltd. It was renamed in November 2008. RHC is a closely held investment company, held by Mr Malvinder Mohan Singh and Mr Shivinder Mohan Singh. On 31 March 2017, RHC held a large stake in several unlisted subsidiaries and group companies. It acts as a joint holding company, along with Oscar, of the group’s two main operating companies Religare Enterprises Limited (REL; ‘INDA’/RWN) and FHL.


RATING HISTORY

Instrument Type

Current Rating

Historical Rating/Outlook

Rating Type

Rated Limits (million)

Rating

22 September 2016

18 March 2015

23 April 2014

Secured long-term NCDs

Long-term

INR2,000

IND D

IND A/ Stable

IND A/Stable

IND A

Secured long-term NCDs

Long-term

INR500

IND C; WD

IND A/ Stable

IND A/Stable

-

Secured long-term bank loans

Long-term

INR750

IND C

IND A/ Stable

IND A/Stable

-

Secured short-term bank loans

Short-term

INR2,500

IND A4; WD

IND A1

IND A1

-



COMPLEXITY LEVEL OF INSTRUMENTS

For details on the complexity level of the instruments, please visit https://www.indiaratings.co.in/complexity-indicators.

SOLICITATION DISCLOSURES

Additional information is available at www.indiaratings.co.in. The ratings above were solicited by, or on behalf of, the issuer, and therefore, India Ratings has been compensated for the provision of the ratings. 

Ratings are not a recommendation or suggestion, directly or indirectly, to you or any other person, to buy, sell, make or hold any investment, loan or security or to undertake any investment strategy with respect to any investment, loan or security or any issuer.

ABOUT INDIA RATINGS AND RESEARCH

India Ratings and Research (Ind-Ra) is India's most respected credit rating agency committed to providing India's credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India's fixed income market. 

Ind-Ra currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies, structured finance and project finance companies. 

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Analyst Names

  • Primary Analyst

    Siddharth Goel

    Associate Director
    India Ratings and Research Pvt Ltd Wockhardt Towers, 4th floor, West Wing Plot C-2, G Block. Bandra Kurla Complex Bandra (East), Mumbai 400051
    +91 22 40001760

    Media Relation

    Mihir Mukherjee

    Manager Corporate Communications and Investor Relations
    +91 22 40356121