India's Shriram Transport Finance says group firm will honour NCD repayment
July 4 (Reuters) - India’s Shriram Transport Finance Co Ltd (STFC) said on Wednesday group firm SVL Ltd has the wherewithal to honour repayment on non-convertible debentures (NCDs) guaranteed by it.
Non-banking financial company STFC had provided a guarantee of about 8.72 billion rupees ($126.86 million) in favour of SVL for the NCDs issued three years back, according to its 2017-18 annual report released on Friday.
Caution crept in as previous annual reports did not disclose details about the guarantee, according to brokerage firm Jefferies. The commercial vehicle financier’s book value may take a hit of 4-5 percent if the guarantee is invoked and liability devolves on the company, Jefferies said.
STFC’s shares plunged 19.2 percent in intraday trade to a near nine-month low on Wednesday before recovering to close 11.7 percent lower.
The promoter group "will address through alternate mechanisms to settle the dues" if SVL defaults, STFC said in a statement. here
“Shriram EPC is a subsidiary of SVL Ltd. Shriram EPC has been referred to NCLT (National Company Law Tribunal) and hence there is a meaningful risk of this off balance sheet exposure becoming a liability for STFC” Morgan Stanley analysts said.
SVL makes investments in sectors including renewable power, real estate and wind turbine manufacturing. ($1 = 68.7350 Indian rupees) (Reporting by Vishal Sridhar in Bengaluru; Editing by Subhranshu Sahu)