Home
>
Articles
>
Srei Group under pressure!

Srei Group under pressure!

Last updated: 26 Nov, 2020 | 08:45 am

Srei Group under pressure!

SREI Infrastructure Finance Ltd. (SIFL) has announced that the company and its wholly-owned subsidiary SREI Equipment  Finance Ltd.(SEFL) have been undergoing a special audit, conducted by an auditor appointed by Reserve Bank of India.

What does this audit mean?  

  • The RBI Act states that the central bank may at any time order to conduct a special audit of the accounts of a non-banking finance company, to safeguard public interest,  or the interest of the NBFC and other stakeholders. 
  • This is generally undertaken if the credit quality of the lending company has significantly worsened.

CARE places SIFL credit rating under watch

  • Srei Group had announced consolidation of the group’s lending business into Srei Equipment Finance Ltd (SEFL), through a slump exchange and was effective from 1  October 2019. However, the consent from all lenders of SIFL had not been obtained for the same.  According to media reports, a few lenders are expected to approach the National Company Law Appellate Tribunal (NCLAT) over SREI group’s move of consolidation, in potential breach of loan covenants. 
  • The NCLT on its order dated 21st October mentioned that creditors to the company will meet on 16th December and 23rd December.
  • CARE said that the ratings of SIFL continue to remain under credit watch with developing implications pending the outcome of the above-proposed meetings of creditors for considering the Scheme of Arrangement amidst stressed liquidity position.

CRISIL Downgrades pass-through certificates originated by SREI Equipment Finance

  • On 19th November CRISIL has downgraded three pass-through certificates issued by Srei Equipment Finance to  A- (SO) from A+ (SO). The rating remains on Rating Watch with Negative Implications.
  • The credit quality of SEFL has deteriorated sharply. The amount of loan book in SMA / Overdue category outstanding as on September 30, 2020, of all cases where moratorium benefit was extended stood at ₹12,282 crore, a worrying 42.5% of the total on-book loans of ₹28,965 crore.

INDmoney Analysis

SIFL has been under severe financial stress for the past few years. SIFL posted a 91% decline in profit for the September quarter. The management clearly indicated that the infrastructure sector has been under severe stress and it will take a long time to bring things back on track. There is a lot of uncertainty with regards to the proposed consolidation  of assets and the slump sale. Also, Srei Infrastructure Finance holds a 3.34% stake in Lakshmi Vilas Bank, which will get delisted from the exchanges and will be valued at zero. 

We recommend that you exit your investments in SREI group.

We are a SEBI registered investement advisor
Mutual Funds watchlist
aditya birla sun life flexi cap fund growth direct plan|ABSL low duration fund direct growth|axis bluechip fund direct growth|axis capital builder fund series 4|axis balanced advantage fund direct growth|axis equity saver fund direct growth|axis multicap fund direct growth|axis global innovation fund of fund direct growth|axis long term equity fund growth NAV|axis quant fund direct growth|axis small cap fund direct growth|axis value fund direct growth|baroda dynamic equity fund direct growth|BOI AXA bluechip fund|canara robeco flexi cap fund direct growth|canara robeco small cap fund direct growth|canara robeco value fund direct growth|DSP quant fund direct|franklin india smaller companies fund direct growth|HDFC arbitrage fund direct growth|HDFC balanced advantage fund direct growth|HDFC developed world index fund NAV|HDFC flexi cap fund direct growth|HDFC housing opportunities fund direct growth|HDFC hybrid equity fund direct growth|HDFC nifty 50 index fund|HDFC index fund sensex plan|HDFC mid cap opportunities direct plan growth|HDFC multi asset fund direct growth|HDFC small cap fund direct growth|HDFC top 100 fund direct growth|HSBC midcap fund direct growth|ICICI prudential balanced advantage fund|ICICI bluechip fund direct growth NAV|ICICI prudential commodities fund direct plan growth|ICICI nasdaq 100 fund direct growth|ICICI nifty next 50 index fund direct growth|ICICI small cap fund direct growth|ICICI prudential technology direct plan growth calculator|ICICI ultra short term fund direct growth|IDBI india top 100 equity fund direct growth|IDBI small cap fund direct growth|idfc us equity fund of fund direct growth|kotak short term fund direct growth|kotak emerging equity fund direct growth|kotak multicap fund direct growth|kotak global innovation fund of fund NAV|kotak gold fund direct growth|kotak savings fund direct growth|kotak small cap fund direct growth|L&T emerging businesses fund direct growth|mirae asset large cap fund direct growth|mirae asset midcap fund|motilal oswal nasdaq 100 fund of fund|navi nifty 50 index fund direct growth|nippon india banking and financial services fund direct growth|nippon banking fund direct|nippon india flexi cap fund NAV|nippon india large cap fund direct growth|nippon india pharma fund direct growth|nippon india small cap fund direct growth|PGIM small cap fund direct growth|quant flexi cap fund direct growth|quant infrastructure fund direct growth|quant tax plan direct plan growth|SBI bluechip fund direct growth|SBI corporate bond fund direct growth|SBI equity minimum variance fund direct growth|SBI flexi cap fund|SBI magnum children's benefit fund investment direct plan|SBI nifty index fund direct growth|SBI small cap fund direct growth|SBI technology opportunities fund direct growth|tata banking and financial services fund direct plan growth|tata business cycle fund|tata technology fund direct growth|tata equity pe fund direct growth|tata ethical fund direct growth NAV|tata focused fund direct growth|tata index fund nifty direct plan|tata india tax savings fund direct plan growth|UTI focused equity fund direct growth|UTI nifty index fund direct growth NAV|UTI nifty 50 index fund direct growth