Faced with huge losses that have affected its cash flow and liquidity, the Rajasthan State Road Transport Corporation (RSRTC) has requested an extension of six months from investors to redeem the last instalment of 10-year bonds worth a total of Rs 311.80 crore.
The last instalment, which the firm has requested an extension for, is worth Rs 124.72 crore.
The instalment, which is 40 per cent of the bond amount, was due on November 1. The state-run firm has requested investors for an extension till May 1, 2023. The coupon of the bond — or the rate of interest to be paid to investors — is 9.70 per cent.
“At present, the corporation is running in huge losses, which have severely affected the cash flow and liquidity of the Corporation. Efforts are being made to improve the cash flow position. We are continuously and closely monitoring the developments and suitable measures are being taken for improving our cash flow for the above envisaged payment,” documents accessed by Business Standard showed.
“In the present scenario, it is very difficult for the corporation to redeem the final instalment of 40 per cent of the bond amount on the due date of November 1, 2022. Therefore, an extension for payment of redemption amount for six months i.e. May 1, 2023, is proposed for which your consent is requested,” the documents showed. The documents were dated October 28.
“The half-yearly interest shall be paid on time and further interest at the rate of 9.70 per cent per annum shall also be served till the date prior to extended redemption date,” the documents showed. RSRTC, based in Jaipur, had issued 10-year bonds worth Rs 311.80 crore via private placement in 2012-13 (April-March).
According to disclosure documents, the redemption of the bonds would be at par at the end of the 8th, 9th, and 10th years in a ratio of 30:30:40, respectively.
A report by the Comptroller and Auditor General of India showed that RSRTC reported a loss of Rs 153.76 crore in 2019-20. The RSRTC’s website does not have financial statements beyond 2019-20. The CAG’s report showed that RSRTC is one of five state public sector enterprises with the maximum erosion of net worth as on March 31, 2020, with an erosion of Rs 4,330.79 crore.
According to the RSRTC website, the company has credit ratings by two firms — Brickwork Ratings and Acuite Rating.
In early October, capital markets regulator Sebi cancelled the licence of Brickwork Ratings India and directed the credit rating agency to wind down its operations within six months for allegedly violating various rules.
In a rating update in July 2020, Brickwork had said RSRTC requested investors for an extension of six months for principal payment of Rs 188.20 crore and interest for Rs 500 crore worth of bonds issued by the Jaipur-based firm in December 2019. Subsequently, Brickwork downgraded RSRTC’s bonds.
RSRTC’s inability to make bond repayments comes at a time when Rajasthan is facing fiscal stress.
The RBI said in its June 2022 Bulletin that Rajasthan counted as a highly stressed state taking into account indicators such as debt to gross state domestic product ratio (GSDP).
Rajasthan exceeded both debt and fiscal deficit targets for 2020-21 set by the 15th Finance Commission, with the state’s gross fiscal deficit exceeding 3.5 per cent of GSDP on an average from 2011-12 to 2019-20, the RBI said. According to the Fiscal Responsibility Legislation, state governments are to keep fiscal deficit within a ceiling of 3 per cent of their GDP.
LOSS-MAKING STATE FIRM
RSRTC had issued 10-year bonds worth Rs 311.80 crore via private placement in 2012-13
CAG report shows RSRTC logged Rs 153.76-cr loss in 2019-20
At Rs 4,330.79 crore, RSRTC among 5 SPSEs with biggest net worth erosion as on March 31, 2020
Brickwork had downgraded RSRTC’s bonds after the state firm requested six-month time for principal payment of Rs 188.20 crore