What’s happening at Sterling and Wilson?2 min read . Updated: 18 Nov 2019, 01:12 PM IST
- Last Thursday, in a disclosure to stock exchanges, the promoters of SWSL – the Shapoorji Pallonji Group and Khurshed Yazdi Daruvala – said they couldn’t honour their inter-corporate loan repayment commitments
- SWSL shares fell 20% in early trade on the BSE on Monday
MUMBAI : Shares of Sterling and Wilson Solar Ltd (SWSL), the recently listed group company from the Shapoorji Pallonji stable, fell 20% in early trade on the BSE on Monday, with investors worried about the company not meeting loan repayment schedules and reneging on IPO commitments.
Last Thursday, in a disclosure to stock exchanges, the promoters of SWSL – the Shapoorji Pallonji Group and Khurshed Yazdi Daruvala – said they couldn’t honour their inter-corporate loan repayment commitments made during the IPO in August and sought more time from the company’s board to repay loans worth ₹2,341 crore, citing unforeseen reasons including a liquidity crisis at the group level.
The outstanding dues stood at ₹2,563 crore (principal amount of ₹2,335 crore and interest of ₹228 crore) on August 20, 2019, the date of listing of the equity shares of the company. The loan was supposed to be repaid within a period of 90 days of the date of listing, that is by November 18. Only ₹250 crore of this has been repaid, leaving an outstanding amount of ₹2341 crore.
However, on 18 November, the board of directors of SWSL considered a revised repayment schedule for the balance outstanding amount of ₹2,341 crore (principal amount of ₹2,085 crore and interest of ₹256 crore) “due to the significant and rapid deterioration in the credit markets creating a significant liquidity crisis, all of which was unforeseeable", the exchange notice said. The company also said the lesser than expected realization from the IPO (given that the amount realised from the IPO was ₹2,850 crore before expenses and taxes as compared to ₹4,500 crores as initially contemplated), hindered repayment plans.
The promoters have assured the board that it will endeavour to reduce the outstanding loan by ₹1,000 crore by December 31, 2019. The board approved the proposal and decided to levy an additional interest rate of 50 basis points p.a. over the current interest rate being applied to the outstanding loan, taking the applicable interest payable to 100 basis points p.a.
The markets have not taken kindly to the news on the delayed payment, sending the stock into a tailspin. In an interview with The Economic Times, Shapoor Mistry, Chairman of the Shapoorji Pallonji group, said that a delay in repayment does not amount to dishonouring the pledge.
“We want to reiterate that the request for an extension of time for the repayment of the intercompany dues does not in any way dilute our intent to honour these payments," Mistry said. Daruvala, chairman and co-promoter of SWSL, told the paper that the intrinsic value of the company continues to be strong as it enjoys a leadership position in key global markets, a significantly improved order book and high return on capital employed.