Independent directors at Power Finance Corporation (PFC) are raising concerns about a proposal to give a ₹20,000-crore loan to the Shapoorji Pallonji Group (SP Group), according to two sources.
The PFC board will discuss this loan proposal on August 18. One source said, “The loan hasn’t been approved yet because the independent directors have questions. Once these are answered, the process can move forward.”
The directors are worried about the loan to SP Group’s Sterling Investment Corp, which plans to use Tata Sons shares as collateral to refinance old debt. These shares are important because Tata Sons’ CEO Siddharth Sharma previously stated that SP Group cannot transfer these shares.
There are also concerns about PFC’s ability to handle such a large loan, especially since PFC usually finances the power sector, not real estate or infrastructure. A PFC spokesperson said a statement will be issued soon.
The SP Group, controlled by billionaire Shapoor Mistry, asked for this loan in March. PFC sought legal advice on whether Tata Sons shares could be used as collateral.
SP Group is facing financial difficulties and needs this loan to pay off high-interest debt. The company has been trying to reduce its debt by selling assets, such as a port in Odisha and a stake in Sterling & Wilson Solar. They also plan to raise money through an IPO for Afcons Infrastructure.
PFC, India’s most profitable non-banking financial company, reported a net profit of ₹14,367 crore for FY24.
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