The Shapoorji Pallonji group is reportedly in the last stages of its debt recast under a one-time restructuring plan that was announced by the Reserve Bank of India (RBI) last year.

Earlier, Shapoorji Pallonji Company Pvt Ltd was looking to restructure around Rs 10,900 crore of its debt after the banking regulator accepted the KV Kamath committee report which allows firms to recast their debt for two years.

Reports now say that the group is looking to sell partial or full stakes in group firms such as Eureka Forbes, Afcons Infrastructure and Sterling & Wilson Solar and proceeds of over Rs 10,000 crore will be used to pare some of its debt. The group has a total debt of over Rs 22,000 crore.

Its debt recast proposal has received the necessary RP4 rating from Care Ratings which is the minimum required for the one-time restructuring mechanism. The plan entails conversion of due interest into a term loan.

Rating agency Icra had said in a note in January that the ratings of Shapoorji Pallonji and Company Pvt Ltd (SPCPL) continue to be on watch with negative implications as the implementation of the one-time restructuring of its loans under the RBI’s resolution framework for Covid-19 related stress announced on August 6, 2020, is still under process.

“Icra is given to understand that the servicing of debt for the lenders who are not part of the resolution plan is timely. The rating watch with negative implications reflects the uncertainty around the terms of the resolution plan. Timely implementation of the resolution plan with favorable terms easing the burden on the cash flows, resulting in improvement of coverage metrics would be a key rating monitorable,” Icra observed.

It further pointed out that SPCPL’s liquidity position is stretched and that the company has free cash balance of around Rs 181.1 crore (along with Rs 380.9 crore cash balances in international EPC projects) as on November 30, 2020. Icra further noted that the estimated cash flow from operations along with the existing cash balance would not be adequate to meet the high repayment obligations falling due over the short to medium term.

"ICRA has taken note that SPCPL has applied for one-time restructuring of its debt exposure. Timely implementation of the resolution plan in a manner that alleviates the company’s tight liquidity position would be crucial’’, it said.’’