Private Banks Hesitant to Lend to Shapoorji Pallonji Infra

Shapoorji Pallonji Group's infrastructure arm Afcon Infrastructure, which enjoys Rs 12,690 crore loan facility from over a dozen banks, managed to raise additional funds of Rs 2,500 crore last month from existing public sectors banks but wasn't able to do so from big private and foreign banks. The private lenders led by ICICI Bank, Axis Bank, Standard Chartered Bank, HSBC Bank and BNP stayed away from increasing their current exposure. The PSBs led by SBI, Bank of Baroda and India Bank brought bulk of the money. The Group with interest in some of the worst hit sectors like real estate, construction and infrastructure is in dire need of funds post the COVID-19 disruption. In fact, the recent move to pledge the Group's holding in Tata Sons, which is currently facing legal hurdles, indicates that there are cash flow mismatches. Shapoorji Pallonji and Company Private Ltd (SPCPL) has recently pledged the shares of some of its subsidiaries and associates to raise resources from the market. Private Banks with existing exposure are cautious because of the group's stretched financial situation. The holding company has already approached the banks for a onetime restructuring under the COVID-19 relief package. The two year restructuring window would definitely provide some interim relief to the group if banks agree. The group companies of the SP Group would be eligible for restructuring as their accounts were standard on March 1, 2020, which is the key eligibility criterion. Last month, Care Ratings put the rating of Group company's commercial paper and proposed NCD issue under rating watch with negative implications. Around the same time, the holding company had asked for more time to pay the dues to its group company Sterling and Wilson Solar Ltd.