Sterling and WilsonSolar hit back at proxy advisory firm InGovern

Venkatesh Ganesh | Updated on January 09, 2020 Published on January 09, 2020

A spokesperson says the report contains factually incorrect, misleading and unverified statements

Sterling and Wilson Solar has hit back at proxy advisory firm InGovern contending that the report is malicious, misleading, unverified and defamatory statements.

InGovern had in its report said that since the IPO in August, minority shareholders have lost Rs 1,700 crore in wealth as Sterling and Wilson Solar’s promoters, Shapoorji Pallonji Group had raised Rs. 2,850 crore through the IPO. While the objects of the IPO were to enable the promoters to repay loans amounting to Rs. 2,563 crore to Sterling and Wilson Solar within 90 days of listing, the company has received only Rs 1000 crore on December 31, 2019, more than 100 days after listing.

“SEBI should force the promoters to provide and exit option for minority public shareholders,” Shriram Subramanian, founder and MD of InGovern had said. Non-fulfilment of obligations by the promoters as per the objects of the offer has resulted in a loss of over 60 per cent in investment value for IPO investors as stock price has fallen from the issue price of Rs. 780 to Rs. 310 as on January 6, 2020, resulting in a loss of Rs. 1,700 crore for public minority shareholders, stated Subramanian.

A spokesperson from Sterling and Wilson Solar said that the report contains factually incorrect, misleading and unverified statements. “The sensationalism in this report is more an attempt to further erode investor wealth rather than its stated objective of working in the interests of the investors. The author of the report has acted irresponsibly as he has neither found it appropriate to ascertain the facts nor provide us with a draft of the report for our response,” said a spokesperson from Sterling and Wilson Solar.

InGovern had also raised the question whether the intention of the IPO was to enable the promoters to repay loans. “Factually, the objects of the offer was to provide liquidity to the shareholders along with the benefits of listing of the equity shares including but not limited to enhancing visibility, brand image. The utilization of proceeds was an added intent of the Promoters and cannot be directly construed to be the object of the offer,” the spokesperson said.

Company officials also pointed to Shapoorji Pallonji’s intent is suitably demonstrated by facilitating repayment of Rs. 1000 crore as committed by 31 st December, 2019. The promoters have also kept their commitment on facilitating repayment of Rs. 1000 crores from the date of listing which does not seem to be taken into account in the payment schedule given in the report, the spokesperson said.

The report also mentions that the share price has fallen solely due to the non repayment of loan. It is important to note that the Board of Directors while approving the repayment schedule levied additional interest of 100 basis points and there is no financial loss to Sterling and Wilson Solar Limited on account of reschedulement and it is illogical to link the stock price reduction to this aspect. We would like to state that share movements are for a variety of reasons and there is no rationale for this allegation.

The report also added that the Board and Audit Committee had no discussion prior to giving approval to the revised schedule of payment.

The spokesperson also pointed out that there were no misleading statements being made in the prospectus. “Being an Offer for Sale, the promoters were under no obligation to mention the utilization of proceeds. In fact the promoters made this disclosure in good faith even though it was not required by law.

Additionally, InGovern in its report alleged that Sterling and Wilson Solar was un co-operative with ICRA, the credit rating agency. “This is an inadequate statement of fact as SWPL is no longer rated by ICRA since the last few years. ICRA was unable to withdraw its earlier rating due its requirement to have an NOC from each and every consortium banker. This matter took time and has now been completely resolved and ICRA has withdrawn its rating on January 6, 2020

Published on January 09, 2020
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