Sterling & Wilson Solar slumps over 48% in seven days

Sterling & Wilson Solar was locked in lower circuit of 10% at Rs 288.90, extending recent steep losses.

Shares of Sterling & Wilson Solar slumped 48.41% in the past seven trading sessions to its current market price of Rs 288.90 from its recent closing high of Rs 560.10 since Thursday, 7 November 2019.

Meanwhile, the S&P BSE Sensex was up 151 points or 0.38% to 40,435.37.

On the BSE, 2,982 shares were traded in the counter so far compared with average daily volumes of 14,957 shares in the past two weeks. The stock was currently frozen at its record low level. It hit a record high of Rs 755.50 on 20 August 2019.

The board of Sterling and Wilson Solar (SW Solar) at its meeting held on Thursday, 14 November 2019, approved a request received from the promoters of the company (Shapoorji Pallonji and Company and Khurshed Y. Daruvala).

The promoters were supposed to pay Rs 2,563 crore to Sterling and Wilson Solar by 18 November. Of this, Rs 2,335 crore was the principal and Rs 228 crore was interest.

The promoters on 14 November requested the board to consider a revised repayment schedule for the balance outstanding amount, which was reduced to Rs 2,341 crore (principal amount of Rs 2,085 crore and interest is Rs 256 crore) as on 30 September 2019 due to the significant and rapid deterioration in the credit markets creating a significant liquidity crisis, all of which was unforeseeable and coupled with the lesser than expected realization from the initial public offer (IPO) (given that the amount realised from the IPO was Rs 2,850 crore before expenses and taxes as compared to Rs 4,500 crore as initially contemplated).

Also, the promoters further stated that Shapoorji Pallonji and Company will endeavour to reduce the outstanding loan by Rs 1,000 crore from the level as of the date of listing by 31 December 2019.

The board took note of the letter and authorised the audit committee of the board of directors of the company to work with the promoters to draw up a plan by 31 December 2019, for repayment of the balance amounts.

Further, the board has also decided to levy an additional interest rate of 50 basis points per annum over the current interest rate being applied to the said outstanding loan, taking the applicable interest payable to 100 basis points per annum which is above the weighted average interest rate on borrowings of the company.

In a conference call on Friday (15 November), the company's management reportedly said that it was working on a revised payment schedule, but did not specify a time frame for the remaining payment. Shapoorji Pallonji Group chairman Shapoor Mistry also explained to investors that the promoters stand by the company's repayment commitments and a delay does not mean dishonouring that pledge.

Sterling & Wilson Solar (SWSL) is an end to end solar engineering, procurement and construction (EPC) solutions provider. The company also provides operations and maintenance (O&M) services, including for projects constructed by third-parties.

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