Shapoorji Pallinji defaults on Union Bank commercial paper worth Rs 200 cr

Shapoorji Pallonji and Company Private Limited (SPCPL), the flagship company of the SP group, has defaulted on Rs 200 crore of commercial paper which was due on September 25, CAREratings said in a statement. The company has applied for a one-time restructuring of its loans.
 

SPCPL, being in the construction and real estate sector, has been severely affected due to Coviod-19. Cash flows from operations and asset monetisation have been adversely impacted and the promoter’s fund raising aggregating Rs 11,000 crore, which was initially planned to be completed by end of Q1FY21 and subsequently spilled over to Q2FY2021 has not been successful till date. CARE Ratings did not give the latest financial numbers of SPCPL and its rating was based on 2019 data.
 

SPCPL has attributed the delay in the promoter funding closure to Covid-19 and most recently to the stay order issued by Supreme Court on pledging the SP group’s shareholding in Tata Sons Private Limited, the holding company of the Tata Group, until the next hearing on October 28, 2020. This unexpected development led to further delay in promoter funding amid the ongoing Covid-19 pandemic crisis, thereby severely affecting the cash flows of Shapoorji Pallonji Group (SP Group). As a result, SPCPL applied for the One Time Restructuring (OTR) facility vide its letter dated September 17, 2020 to all its lenders, under RBI guidelines issued on August 6, 2020 and September 7, 2020.
 

SPCPL has decided not to make any debt repayments that may be due to its lenders as the OTR process has been initiated. Consequently, the CP due to Union Bank of India on September 25, 2020 was not paid despite availability of liquid funds in the form of free bank balances of Rs 530 crore (excluding encumbered fixed deposits of Rs 140 crore) and unused CP lines of Rs 400 crore at standalone level.