Sterling & Wilson Solar seeks extension for loan repayment after promoter delays repayment

Mumbai: Sterling & Wilson Solar (SWS) is talking to its lenders to extend the schedule for its 2020-21 debt repayment, as cashflow from operations remains muted and repayment of loan that it had extended to promoters Shapoorji Pallonji Group is further delayed by a year, the company told ET.

The promoters — Shapoorji Pallonji Group and chairman Khurshed Daruvala — owe SWS ₹1,148 crore, which is close to the ₹1,200 crore that the company owes to its lenders. They sold part of their holding in the company in August 2019 with the commitment of using the proceeds to repay the loans they had taken from the company within 90 days. But they went back on the commitment citing a challenging business environment and a revised schedule was drawn. The promoters faltered again and have got a one year extension now till September 2021.

The Securities and Exchange Board of India is believed to have sought clarification from SWS to determine if there was a violation of Issue of Capital and Disclosure Requirement (ICDR) regulations and also the Companies Act 2013. SWS told ET that SEBI’s questionnaire is a follow up to their earlier questions in February 2020 and the company is in the process of responding to it.

SWS said the board gave an extension to promoters as they were unable to pay due to the impact of Covid-19, compounded by legal objections raised for their fund raising exercise. The Shapoorji Pallonji Group has a total debt of ₹30,000 and was banking on raising funds by pledging its 18.37% stake in the privately-held Tata Sons, but the latter has challenged it in the court.

“We have also levied a penal rate of 4% above our average borrowing rate (to the promoters). Hence, with an approximate interest of about 14-15 % it will be in the best interest of the promoters to facilitate repayment at the earliest,” SWS said in response to an ET query.

While the parent struggles with a liquidity crisis, SWS too is faced with negative cash flow from operations due higher unbilled revenue, and is therefore asking its lenders for more time for repayment.

“Management will work in close coordination with the bankers and promoters to see that sufficient cash flows are available to make payments if and when debt rollovers are not possible. Due to the strong order book, management will also look at utilizing business cash flows as may be necessary,” SWS said.
SWS has term loans worth ₹653 crore payable in FY21, of which ₹205 crore is due by end-September and ₹448 crore in the December quarter.

“The new orders booked in the first five and a half months of the current year are ₹5,696 crore as compared to ₹828 crore in the same period last year. So, despite COVID the company is doing very well both in terms of revenue and order booking. We are confident that the banks will continue to support the company which is performing very well considering the macro economic conditions,” the company said.

The non-fulfilment of the promoters’ commitment as per the objects of the offer and the subsequent delay in repayment, coupled with delays in order execution, has eroded the share price by over 70% from the issue price of ₹780.