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Home > Business > Business Headline > Report

RIL, REL on rating watch

Freny Patel in Mumbai | November 26, 2004 12:06 IST

Rating agencies are in talks with Reliance Industries and Reliance Energy to assess the impact of the directors' resignation on the business of Reliance Energy.

After a proper evaluation, the agencies could put Reliance Energy on rating watch if they feel today's development could impact the company's debt servicing.

The exit of six top directors of Reliance Energy has stumped the industry. Unlike the equity market, which saw Reliance Energy stock hammered, debt investors assess the impact on the cash flows of a company.

"Reliance Energy is in the retail segment, and cash flows are not expected to suffer immediately since customers will not give up their electricity connections," said a senior executive of a rating firm.

Ratings agencies said that the resignation of the directors over an ownership issue is unprecedented.

"We are talking to the companies to try and find out the background behind the resignation, and then will take a decision," said a senior Crisil official.

"We have to see how lenders react to it," said a senior Icra official. Rating agencies see the Reliance group as being very strong and having the ability to overcome the current dilemma on 'ownership' issues.

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