Shapoorji Pallonji seeks 2-year debt moratorium

The Shapoorji Pallonji (SP) group has sought a two-year debt repayment moratorium from its lenders as the real estate sector and its mainstay construction business are undergoing a slowdown due to the Covid pandemic. The group has asked lenders to extend principal repayments by two years, in accordance with the recommendations made by the KV Kamath panel appointed by the RBI to help Covid-hit companies.

The Shapoorji Pallonji (SP) group has sought a twoyear debt repayment moratorium from lenders, with the realty sector and its mainstay construction business undergoing a slowdown due to the pandemic.

The group has asked lenders to extend principal repayments by two years, in accordance with the recommendations made by the KV Kamath panel appointed by the Reserve Bank of India.

It wants outstanding interest to be capitalised or converted into FITL-I (funded interest term loan) and has asked for interest on all facilities till September 30 to be converted into FITL–II.

The group’s flagship, Shapoorji Pallonji Corporation’s (SPCPL’S) stand-alone debt repayment obligations in FY21 stand at ~5,320 crore, and consolidated at ~10,000 crore. The group’s total borrowings amount to more than ~25,000 crore, while the flagship has ~23,500 crore of debt.

It has promised to repay its debt in four quarterly instalments starting June 30, 2022. It will sell its assets and investments and use the inter-corporate deposit (ICD) repayments from group companies to reduce debt.

When contacted, a group spokesperson said that the pandemic has had a major impact on companies globally. SPCPL, the holding company of the SP group, has sought a one-time resolution (OTR) of its obligations under the Covid relief framework regulations of the central bank.

The company applied for relief under these provisions in late September. The OTR was successfully invoked on October 26, by 100 per cent of the company’s lenders. A source in the banking sector said the company had free cash balance of ~530 crore as on September 25, 2020.

Its estimated cash flow from operations, along with its existing cash balance, will not be adequate to meet its repayment obligations due in the next few quarters.

SPCPL’S liquidity was hit by a delay in promoter fundraising on account of Covid-19, and the Supreme Court’s stay order on the pledging of shares held in Tata Sons. This is likely to lead to a cash flow mismatch, thereby impact the liquidity position of group companies.

The group holds 18.4 per cent stake in Tata Sons, estimated by the group to be ~1.78 trillion, while the Tatas estimated it much lower at ~80,000 crore.

Lenders said that once the Supreme Court gives its order on the Tata-mistry dispute, it will be easier for SP group to raise funds.

In April last year, global financial powerhouse KKR had acquired Shapoorji Pallonji Infrastructure Capital’s five operational solar energy assets for a sum of ~1,554 crore.

The SP group used the proceeds to reduce debt in its construction business.