Setback for Shapoorji Pallonji Group even as it rebounds from debt woes

MUMBAI: Cyrus Mistry’s death has come when the oncestressed Shapoorji Pallonji Group was on the mend, having regained ‘A’ rating and pared debt by several thousand crores through asset sales.
A fortnight ago, rating agencies had upgraded Shapoorji Pallonji and the group’s flagship following a successful exit from a one-time restructuring (OTR) plan with repayment of the entire restructuring debt on March 31, 2022, ahead of deadline, through infusion of funds by promoters, proceeds from monetisation of assets and a fresh term loan.
“They have ruthlessly sold assets to ensure they meet liabilities ahead of schedule,” said a banker. Before his demise in June, Pallonji Mistry had passed on the group’s ownership to his sons. Cyrus focused on investment in new age sectors, while his brother Shapoor looked after the running of the business.
In 2020, the group had to go through the ignominy of a loan restructuring through a scheme that the RBI had announced after Covid. This was a big fall for the group which was considered as a blue-chip because of the promoter’s holding of shares in Tata Sons. However, the setback was temporary as it sold businesses toraise cash and exit restructuring ahead of schedule.
Exactly a year ago, the construction giant sold its majority stake in Eureka Forbes (maker of Aquaguard water purifiers and other durables) to US private equity fund Advent for Rs 4,200 crore. A month later the SP Group sold 40% in Sterling & Wilson Solar for Rs 2,845 crore to Reliance.
According to rating agency ICRA, most of the promoter debt (around Rs 3,100 crore out of Rs. 3,900 crore) has been converted to compulsorily convertible preference shares (CCPS)/perpetual debt, resulting in an improvement in its net worth. This, coupled with a significant reduction in SPCPL’s external debt by around Rs. 8,300 crore, has improved finances. To exit the restructuring scheme ahead of schedule, the company reduced its debt by Rs 13,500 crore to Rs 23,475 crore.

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