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CARE cuts SPCPL ratings following initiation of one-time loan recast

The non-repayment is despite the company having availability of liquid funds in the form of free bank balances of Rs.530 crore (excluding encumbered FDs of Rs.140 crore) and unused CP lines of Rs.400 crore at standalone level.

October 01, 2020 / 11:20 PM IST

Rating agency, CARE, has cut the ratings on certain instruments issued by Shapoorji Pallonji and Company Private Ltd (SPCPL) following non-payment of dues to lenders and the initiation of the one-time loan restructuring.

Rating on the proposed NCD issue has been cut to CARE A- from CARE A+ while rating on commercial paper has been cut to CARE A2+ from CARE A1+, the agency said in a note on September 29.

The non-payment of Rs 200 crore that was due to Union Bank of India on September 25 is not a default from the point of view of rating agency's default recognition norms, said a senior official at CARE to Moneycontrol requesting not to be named.

The non-repayment is despite the company having availability of liquid funds in the form of free bank balances of Rs.530 crore (excluding encumbered FDs of Rs.140 crore) and unused CP lines of Rs.400 crore at standalone level.

Once the OTR is initiated, the company doesn’t need to make the payment to lenders according to the terms of OTR.

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“The company has chosen not to make payments on account of the initiation of OTR (one-time restructuring). It is not a default from the point of view of CARE rating’s default recognition norms,” said the official.

CARE has revised the rating in line with CARE Ratings criteria on the ‘Analytical treatment for one-time restructuring due to Covid-19 related stress, issued on September 29, 2020.

The MF exposure to SPCPL including its subsidiaries came up to a grand total of Rs 1,231.64 crores. The report also further notes that, SPCPL has chosen not to make any debt repayments. This may be due to its lenders as the OTR process has been initiated, the report noted.

CARE acknowledged the progress made by SPCPL in the reduction of its off balance sheet exposure in the form of financial and performance guarantees given to its subsidiaries and group companies since last review. However, its achievement has remained below the anticipated levels, the agency noted in its report.



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Moneycontrol News
first published: Oct 1, 2020 04:08 pm
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