Shriram Transport Doesn’t See Any Hit From Group Unit’s Bankruptcy Proceedings
The management of Shriram Transport clarifies on the road ahead for SVL after it has been taken to the NCLT.
Shares of Shriram Transport Finance Co. Ltd. pared early losses and rose nearly three percent after the management clarified that a group company, in which it had an off balance sheet exposure, being taken to the bankruptcy court would not impact it.
SVL Ltd, the holding company of the non-financial businesses of the Shriram Group, was admitted into the bankruptcy process under the Insolvency and Bankruptcy Code by the Chennai bench of the National Company Law Tribunal on Sept. 10 based on a petition filed by a customer owing to an internal dispute.
“The dispute amount is Rs 6 crore, and I think SVL will be able to address it,” Umesh Revankar, managing director and chief executive officer, Shriram Transport Finance, told BloombergQuint.
The company’s exposure to SVL is in the form of corporate guarantee on non-convertible debentures issued by SVL worth Rs 870 crore, which will become due only in June 2019. Hence, the admission of SVL to NCLT by a customer will not have any immediate bearing on STF at this stage, Revankar added. He remained confident that any liability arising at maturity will be borne by the promoter group and will not affect Shriram Transport Finance.
Also, the company is not required to make additional provisions at present.
Meanwhile, internal discussions for exploring a merger with Shriram City Union are still on, Revankar said. “Currently, discussions haven’t reached the stage where we take any proposal to the Board”.
Shares of Shriram Transport had opened 4 percent lower at Rs 1,150. However, they pared all early losses and were trading 2.7 percent up at Rs 1,197.45 apiece on the BSE at 1.00 p.m.
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