The Piramal group will have to raise Rs 3,033 crore by March next year to meet its financial commitments at a time when ICRA, a Moody’s affiliate, has downgraded group firms AASAN Corporate Solutions and Piramal Realty.
The group needs to pay AASAN Corporate Solutions’ debt of Rs 1,350 crore and Rs 1,683 crore as its contribution for the rights issue announced for Piramal Enterprises Ltd (PEL).
On October 26, group Chairman Ajay Piramal said he would underwrite the entire Rs 3,650-crore rights issue.
Apart from the rights issue, PEL is raising Rs 1,750 crore by making a preferential allotment of convertible debentures to Caisse de dépôt et placement du Québec (CDPQ) of Canada.
The group holds 20 per cent in unlisted Shriram Capital and another 10 per cent in Shriram City Union.
It sold its 10 per cent stake in Shriram Transport for Rs 2,300 crore in June this year. While downgrading its debt instruments on Friday, ICRA said the group would have to sell either more stake in PEL or assets because the family office entities in the group had combined liquidity of Rs 400 crore as of June 30 this year.
A Piramal spokesperson said the promoter family was committed to subscribing to its share of the rights issue. “The rights issue announcement has been well received by institutional investors. Moreover, the rights issue is fully underwritten,” the official said.
“As far as AASAN Corporate Solutions is concerned, in accordance with industry practice, bonds and debentures are routinely refinanced well before their due date. We are in the advanced stage of refinancing the debenture amount,” the spokesperson said.
While downgrading the Rs 350-crore NCD issue of Piramal Realty to “A minus” with a negative outlook, ICRA said the revision was on account of the operating environment owing to tight liquidity in the market.
“Furthermore, the company may need to refinance a significant quantum of debt due for repayment in fiscal 2020 given the limited standalone financial strength of the company,” it said.
As of March 31 this year, Piramal Realty had a cash and bank balance of Rs 37 crore and ICRA said the liquidity available was low compared to the repayment obligations due in the short term.
Piramal Realty was set up in 2010 and has a presence in real estate through subsidiaries /step-down subsidiaries/limited liability partnerships which have projects housed in it or through joint ventures.
The company has exited real estate projects.