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.
Afcons claims that it enjoys a strong support from a consortium of banks despite the temporary liquidity issue at parent company level."Every bank in the consortium of Afcons is upbeat about the company because of its consistent performance over the past 20 years," says Afcons.
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 one time 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.
During the fiscal 2019-20, Afcons achieved a total revenue of Rs 10,130 crore, a 40 per cent of which came from international projects with a net profit of Rs 248 crore. In the past five years, the company has grown at a CAGR (in turnover and profitability) of 20 per cent and 36 per cent, respectively. "Afcons has consistently reduced its debt over the past five years despite significant growth in turnover," said the company.
The group entered the infrastructure business some two decades ago by buying Afcons Infrastructure which had specialisation in roads and bridges. The group later expanded infrastructure business by floating SP Infra for running toll roads and owning ports, etc.
The group had earlier planned to unlock the value in the infrastructure arm by way of IPO in 2007 but it didn't happen. The IPO was aimed at its expansion into overseas market where a publicly listed company is perceived as having better corporate governance structure.