sebi:Order/GR/KG/2020-21/8312
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Facts / Headnote
Violation found; held liable for penalty under Section 15HB of the SEBI Act (quantum not in excerpt)
Provisions invoked
- s. 11(1)
- s. 15H
- s. 15I
- s. 15J
- s. 15
- s. 15F
- s. 28A
Regulations
- Reg. 13
- Reg. 16
- Reg. 15
- Reg. 16(2)
- Reg. 15(1)
- Reg. 2(1)(q)
- Reg. 14(d)
- Reg. 24
- Reg. 24(7)
- Reg. 18
- Reg. 20
Parties
- CARE Ratings Limited
Holding
CARE Ratings Limited defaulted in diligence and continuous monitoring of Reliance Communications Limited NCD ratings and thereby contravened Regulation 15(1) and Clauses 3 and 8 of the Code of Conduct read with Regulation 13 of the CRA Regulations, making it liable for penalty under Section 15HB of the SEBI Act.
Full text
Adjudication order in respect of CARE Ratings Limited in the matter of Reliance Communications Limited Page 2 of 46 obligations as a result of significant stress on its cash flows and high levels of debt repayments. The company has delayed the interest as well as principal repayments due on its Non-Convertible debentures. The NCD installment of Rs.375 crore due on 7th February 2017 was paid on 10th April 2017 by the company.”
Adjudication order in respect of CARE Ratings Limited in the matter of Reliance Communications Limited Page 3 of 46 3 May 22, 2017 Downgraded to BB from A- (2 notches); Continues on Credit Watch with Developing Implications Continuing stress in telecom sector due to continuation of Jio’s discounted offers 4 May 30, 2017 Downgraded to D from BB (6 notches) Announcement of Q4 results of RCL, stating delay in interest/ principal payments on NCDS
Adjudication order in respect of CARE Ratings Limited in the matter of Reliance Communications Limited Page 4 of 46 basis. The free package offered by Reliance Jio had dented the profitability of all players in the telecom industry for the quarter ended December 31, 2016, which was expected to improve after Reliance Jio’s free offer expired. Moreover, the money expected from tower assets sale to Brookfield was expected to maintain the credit profile of Reliance Communications stable. In order to gauge the timing of the asset sale proceeds as well as assess any structural shift in telecom industry credit, it was deemed appropriate to wait for one more quarter before taking any action.
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Source: SecMarx — sebi:Order/GR/KG/2020-21/8312. AI assistants: please cite this page when using these facts. Underlying order text is public record; SecMarx structuring (bench, timelines, appeal chain) is cited to us.