Afcons to repay SBI loan instead of Shapoorji Finance
ECONOMY & POLICY

Afcons to repay SBI loan instead of Shapoorji Finance

Shapoorji Pallonji group’s flagship construction firm Afcons Infrastructure, has dropped its plans to use part of its IPO proceeds to repay a loan taken from a related party - Shapoorji Pallonji Finance - which is categorised as part of the promoter group of Afcons. The change came after the company received observations on its draft red herring prospectus from markets regulator Securities and Exchange Board of India (SEBI) and the stock exchanges.

In the case of Afcons, SEBI raised concerns about the appropriateness of using IPO proceeds to repay a loan to SPCPL. Faced with SEBI’s concerns, Afcons made a strategic decision to drop its plan – a move that can be seen as a proactive measure to ensure compliance with regulatory expectations and to maintain investor confidence ahead of its IPO. By retracting the loan repayment plan, Afcons is signalling its commitment to transparency and responsible corporate governance.

As part of plans outlined in the draft red herring prospectus filed on 28 March, Afcons had proposed that it will use fresh proceeds of the IPO to repay a Rs 1 billion financing facility led by Central Bank of India along with Shapoorji Pallonji Finance in a co-lending arrangement where the Central Bank of India has a 75 percent share and Shapoorji Pallonji Finance has a 25 percent share. The loan was taken in July 2023 for working capital requirements and for payment to vendors and carries an interest rate of 10.95 percent. Out of the total fresh proceeds of Rs 12.5 billion proposed to be raised from the IPO, the biggest chunk of Rs 5 billion was reserved for repayment of certain loans availed of by Afcons. Apart from its promoter group company, other lenders that are proposed to be repaid from the IPO proceeds include State Bank of India, DBS Bank and HSBC. Following the SEBI observations, the Rs 1 billion earlier earmarked for Shapoorji Pallonji Finance loan has now been reallocated towards repayment of loans of similar amount from State Bank of India.

The flagship infrastructure engineering and construction company of the Shapoorji Pallonji group has, over the last 10 years, completed 76 projects across 15 countries with a total historic executed contract value of Rs 522.2 billion. As of 30 September 2023, Afcons, which is known for its expertise in executing complex projects across various domains, including marine, highways, bridges, tunnels, and metros, has 67 active projects across 13 countries, aggregating to an order book of Rs 348.88 billion. Some of the major projects executed by Afcons include the Chenab Bridge in Jammu and Kashmir, Atal tunnel in Himachal Pradesh and the Mahatma Gandhi Setu bridge in Bihar.

Shapoorji Pallonji group’s flagship construction firm Afcons Infrastructure, has dropped its plans to use part of its IPO proceeds to repay a loan taken from a related party - Shapoorji Pallonji Finance - which is categorised as part of the promoter group of Afcons. The change came after the company received observations on its draft red herring prospectus from markets regulator Securities and Exchange Board of India (SEBI) and the stock exchanges. In the case of Afcons, SEBI raised concerns about the appropriateness of using IPO proceeds to repay a loan to SPCPL. Faced with SEBI’s concerns, Afcons made a strategic decision to drop its plan – a move that can be seen as a proactive measure to ensure compliance with regulatory expectations and to maintain investor confidence ahead of its IPO. By retracting the loan repayment plan, Afcons is signalling its commitment to transparency and responsible corporate governance. As part of plans outlined in the draft red herring prospectus filed on 28 March, Afcons had proposed that it will use fresh proceeds of the IPO to repay a Rs 1 billion financing facility led by Central Bank of India along with Shapoorji Pallonji Finance in a co-lending arrangement where the Central Bank of India has a 75 percent share and Shapoorji Pallonji Finance has a 25 percent share. The loan was taken in July 2023 for working capital requirements and for payment to vendors and carries an interest rate of 10.95 percent. Out of the total fresh proceeds of Rs 12.5 billion proposed to be raised from the IPO, the biggest chunk of Rs 5 billion was reserved for repayment of certain loans availed of by Afcons. Apart from its promoter group company, other lenders that are proposed to be repaid from the IPO proceeds include State Bank of India, DBS Bank and HSBC. Following the SEBI observations, the Rs 1 billion earlier earmarked for Shapoorji Pallonji Finance loan has now been reallocated towards repayment of loans of similar amount from State Bank of India. The flagship infrastructure engineering and construction company of the Shapoorji Pallonji group has, over the last 10 years, completed 76 projects across 15 countries with a total historic executed contract value of Rs 522.2 billion. As of 30 September 2023, Afcons, which is known for its expertise in executing complex projects across various domains, including marine, highways, bridges, tunnels, and metros, has 67 active projects across 13 countries, aggregating to an order book of Rs 348.88 billion. Some of the major projects executed by Afcons include the Chenab Bridge in Jammu and Kashmir, Atal tunnel in Himachal Pradesh and the Mahatma Gandhi Setu bridge in Bihar.

Next Story
Infrastructure Urban

Larsen & Toubro Secures Contract from Defence Ministry

The Ministry of Defence, Government of India, has awarded a significant contract to Larsen & Toubro (L&T) for supplying K9 Vajra-T Artillery Platforms to the Indian Army. As per the company's project classification, the contract is valued between Rs 50 billion and Rs 100 billion. The K9 Vajra-T, a 155 mm, 52-calibre tracked self-propelled artillery platform, is an adaptation of the globally renowned South Korean K9 Thunder howitzer. It has been co-developed by L&T and Hanwha Aerospace to meet the Indian Army's specific operational needs across diverse terrains, including deserts, plains, and..

Next Story
Real Estate

Delhi-NCR Housing Market sees 25% Sales Growth

The Delhi-NCR property market has maintained its momentum during the December quarter, with housing sales and new supply estimated to grow by 25 per cent and 59 per cent, respectively, as reported by PropEquity. Data from the real estate analytics firm suggests that housing sales in Delhi-NCR are likely to rise to 12,915 units during the October-December period of this year, compared to 10,354 units in the corresponding period of the previous year. New supply in the region is expected to increase significantly, reaching 11,223 units, a 59 per cent rise from 7,072 units in the year-ago quarter..

Next Story
Infrastructure Urban

DDC Approves Five Key Projects Under Kasaragod Development Package

The District Development Committee (DDC) has approved a budget of Rs 100.08 million for five key projects under the Kasaragod Development Package. This funding is part of the Rs 700 million allocated in the State budget for the 2024-25 financial year, with administrative approval formally amended to incorporate these initiatives. The decision was made during a meeting chaired by District Collector K. Inbasekar on Saturday, December 21. The approved projects include Rs 40.99 million for constructing Udayapuram Thungal Road in Kottom Belur grama panchayat and Rs 20.56 million for setting up a ..

Hi There!

"Now get regular updates from CW Magazine on WhatsApp!

Join the CW WhatsApp channel for the latest news, industry events, expert insights, and project updates from the construction and infrastructure industry.

Click the link below to join"

+91 81086 03000