Lawstreet Journal

Defamation suit against Moody’s filed by Edelweiss

Lawstreet Journal 17 Jul 2020 8:01pm

Image courtesy: Lawstreet Journal Business Defamation suit against Moody’s filed by Edelweiss

Rating agency Moody’s has been sued for $100 million (Rs 750 crore) by Edelweiss Financial Services for misreporting its financials in a recent report. Another Rs 100 crore has been sought by Edelweiss in exemplary damages in a suit filed before Bombay HC. 

In Moody’s 18th May report titled, “Economic Slowdown Worsened by Coronavirus will Exacerbate Liquidity Stress”, the rating agency had highlighted risks to NBFCs, including Edelweiss, due to their weak liquidity profiles, and exposure to vulnerable sectors.

Rajesh Shah, Chairman, and CEO of Edelweiss group stated that they have maintained 10-12% of their borrowing as liquidity. And that for the last 18 months they have been maintaining 18-20% of their borrowing as liquidity.

He further said that in the last 3-4 months customer contractual inflows have come down due to the Covid-19 pandemic. There is a gap, resultantly. For Edelweiss the gap was Rs 4000 crores between April-September. They had Rs 8000 crore liquidity by March-end. It was stated that they were still covered after Rs 8000 crore liquidity and Rs 4000 crore COVID-related ALM mismatch. 

Rajesh Shah said, “Out of this Rs 4,000 crore, we have lines from banks, and we have been able to raise about Rs 2000-2500 crore, and we are hoping to raise another Rs 1000-1500 crore so that COVID impact is neutralized.”

It has been alleged in the petition that incorrect numbers were put out by the rating agency for Edelweiss Financial Services in its report to damage the group and create panic among shareholders. This report was… Continue Reading...

Tagged: Defamation  
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