Deccan Chronicle Holdings defaults on loan payments
Deccan Chronicle Holdings has defaulted on its debt obligations, rating agency CARE said, downgrading the firm’s short-term borrowings to default grade.
“The revision in rating is due to default by the company on short-term non-convertible debentures (NCD). As per submissions, the company had a cash /FD balance of Rs 372 crore as on December 31 and gross cash accruals amounting to Rs 20 crore. Despite the liquidity, the company has defaulted on its debt obligations. The company has not offered any explanation regarding the same,” CARE said in a statement on July 2.
“We have with Pramerica Mutual Fund a CP (commercial paper) that got delayed because there was a technical mismatch on the dates of 26/27 of June. Apart from this, there is nothing else due. All other instruments are due only in late October/ November," PK Iyer, V-C, Deccan Chronicle Holding, told ETover phone. Iyer did not disclose any other details of Deccan Chronicle Holding’s upcoming payments.
ET learns that the company raised close to Rs 500 crore from institutional investors — including insurance funds, term lenders and mutual funds — a year ago. It managed to retire debt of about Rs 300 crore, but fell short on repayment to some institutional investors, including Pramerica.
As per data collated from Value Research, Deccan Chronicle Holdings accounted for 1.3% of Pramerica’s liquid fund, 3.3% of its ultra short-term bond fund, 6.2% of credit opportunities fund, 4.8% of dynamic monthly income fund and over 5% of Pramerica Dynamic Fund on May 31, 2012.
Post the default in June, the fund house has taken the entire unpaid debt on to its personal account to protect investors, a person close to the development said. An email query sent to Pramerica remained unanswered at the time of going to press.
"Pramerica cannot be blamed for the investment call as till last month, Deccan Chronicle bore a decent ‘A1+’ rating. Investors need not worry as the fund house has taken the entire portion of unpaid debt to its account," said a leading fund distributor, on conditions of anonymity.
Taurus Mutual Fund also has an exposure to Deccan Chronicle but its CEO Waqar Naqvi said that it has recovered its investments (worth Rs 50) crore from the Hyderabadbased company.