SP group to raise Rs 10,000 cr from asset sale, meet debt repayment target

Group puts textile land in Karnataka on sale; it had earlier sold its stake in Eureka Forbes and in renewable power firm Sterling and Wilson

After selling its stake in consumer durable firm, Eureka Forbes and in renewable power firm, Sterling and Wilson Solar, the Shapoorji Pallonji group has put its textile unit at Gokak in Karnataka on sale and will be able to meet its target to raise Rs 10,000 crore from asset sales by next March.

The sale of Eureka Forbes to private equity firm Advent International will result in a net inflow of Rs 3,000 crore to the group flagship, Shapoorji Pallonji Construction Pvt Ltd. The group is also selling part of its real estate portfolio including land bank at Gokak textile unit to raise an additional Rs 1,000 crore. The rest of the funds will come from the proceeds of S&W Solar stake sale to Reliance Industries, said a banking source.

The SP group did not reply to an email seeking comments on its asset sale plan. A SP group source, however, said the promoter entities have earlier managed to raise debt by pledging part of their Tata Sons Pvt Ltd’s stake. The group owns 18.4 per cent stake in the company whose valuation has seen a sharp uptick following a rise in the Tata group listed shares. The SP group source did not specify how much stake has been pledged or the quantum of funds raised via this route.

The Mistry family infused additional funds into SPCPL which helped the company repay bank debt of Rs 3,450 crore by September end, as per the deadline set under the one-time debt restructuring (OTR) plan for the first half of the financial year.

As per the OTR approved by the lenders, the group flagship received a moratorium on interest repayment on its debt except for the Funded Interest Term Loan (FITL) part.  As per the RBI circular issued in May last year to help Covid-hit companies, banks are allowed to convert the accumulated interest for the moratorium period into FITL. At the same time, the principal repayments of the company were postponed by two years till next September thus providing a cushion to the group. At the time of OTR, SPCPL had Rs 25,000 crore of debt on its books.

The group’s financial profile deteriorated after Covid pandemic hit the real estate and construction companies. In fiscal 2021, the company’s total sales on a standalone basis fell to Rs 6,566 crore from Rs 9,770 crore, while it made a loss of Rs  952 crore in fiscal 2021 from a profit of Rs 676 crore in the fiscal 2020, as per a Care Ratings statement. The group started defaulting on loan repayments and put its non-core assets on sale. The promoters entities had also taken loan worth Rs 2,563 crore from its listed subsidiary, Sterling and Wilson Solar which has now been paid in full on September 29 this year.