Revenue, recourse and the divestment point the same way
The exposure is concentrated inside the promoter group rather than spread across third parties. Revenue is billed to entities described as forming part of the promoter group, so margin, receivable and collection on that revenue all depend on the same group rather than on third-party credit risk. Guarantees given for group borrowings are excluded from the disclosed contingent liability, so the face of the accounts understates recourse. The assets securing those borrowings do not appear on the consolidated balance sheet, because the entities holding them are classified held-for-sale. That exclusion holds only while the held-for-sale classification does. If the divestment does not complete, the classification reverses and the excluded guarantees return on balance sheet against the same cash flows that would service the facility. Whether the entities the revenue is billed to and the entities whose borrowings are guaranteed are the same set is not established by public filings, and is the first thing to settle: if they are, the revenue, the receivable and the recourse are one exposure rather than three.
Ask the CFOOf the revenue transacted with related parties, how much is billed, how much is collected, and on what payment terms? Please provide the ageing of receivables from those entities separately from third-party receivables.
- The guarantees excluded from the disclosed contingent liability are 7.58× the figure in the table. Please provide the full guarantee schedule — beneficiary, amount, drawn balance, tenor and release condition.
- What is the status and expected completion date of the divestment, and what happens to the consolidated leverage position if it does not complete within the facility tenor?
- Which approvals and conditions precedent remain outstanding on the divestment, what is the revised expected completion date, and what is the consolidated position if the classification is reversed?
Evidence — 4 detected condition(s)
- contingent liability note, footnote Off-balance-sheet guarantees / net worth: 1.84 against 1.0 (breached by 0.84). Guarantees of ₹1,385 Cr sit outside the ₹183 Cr disclosed as contingent liabilities, on the company's own footnote, because the subsidiaries they support are classified held-for-sale. The assets securing them — carrying value ₹1,825 Cr — do not appear on the consolidated balance sheet. Total guarantees are 1.84× net worth. Separately, the parent carries ₹538 Cr of investments in those subsidiaries as assets held for sale on its own balance sheet.
- contingent liability note, footnote Plant assets of ₹1,825 Cr secure those borrowings and do not appear on the consolidated balance sheet, because the holding subsidiaries are classified held-for-sale.
- related-party transactions note Revenue transacted with related parties: 59.8 against 25.0 (breached by 34.80). ₹1,085 Cr of revenue — 59.8% of turnover — is disclosed as transacted with related parties, described in the note as: entities forming part of the promoter / promoter group, including project-specific spvs in which the control is intended to be temporary. The comparable figure a year earlier was ₹385 Cr. Margin, receivable and cash on that revenue depend on the same group, so it does not carry third-party credit risk and should not be read as though it does.
- auditor key audit matter, assets held for sale The exclusion holds only while the held-for-sale classification does. On the company's own statement: The auditor's report states that investments in certain SPVs were reclassified from investments to assets held for sale for project allocation and intended divestment. The reclassification is based on management’s assessment of intended transfer and expected realisation.