A clean slate: Shapoorji Pallonji group aims to free itself from its net debt by March

“The plan is to get out debt free and start the next exercise with a clean slate. With the country’s economy improving, leading to an overall increase in business, and debt now reduced to manageable levels, that shouldn’t be a problem, ”one of the sources said.

By Rajesh Kurup

Shapoorji Pallonji Group (SP Group) intends to raise around Rs.3655 crore through a combination of equity and debt, including the sale of stakes in some companies, to get out of net debt by March next year.

The immediate plan is to sell a stake in Mumbai-based construction and engineering company Afcons Infrastructure and a plot of land in Karnataka. Following the reduction of the stake in these companies, SP Group would go into debt for the remaining amount, sources close to the development said.

In addition, internal accruals would also contribute to the pot, as the group expects funds to come from its core business, construction and real estate.
“The plan is to get out debt free and start the next exercise with a clean slate. With the country’s economy improving, leading to an overall increase in business, and debt now reduced to manageable levels, that shouldn’t be a problem, ”one of the sources said.

Afcons Infrastructure is a private company, active in road construction, general civil works, offshore oil and gas, among others. The group owns the plot of land through its textile branch in Karnataka. However, the quantum of the plot could not be determined immediately.

In September, the 156-year-old trading conglomerate had net debt of Rs 10,900 crore, which was reduced to Rs 6,500 crore following a sale of a stake in its consumer durables company Eureka Forbes. The group had raised Rs 4,400 crore from the sale of the stake after selling a 72.56% stake to US private equity fund Advent International.

Eureka Forbes, a wholly owned subsidiary of the SP Forbes & Company group, is active in water purification, vacuuming, and health and safety solutions.

Later in October, the group raised another Rs 2,845 crore by selling a 40% stake in Sterling & Wilson Solar (SWSL) to Reliance New Energy Solar Ltd, a company
100% subsidiary of billionaire Mukesh Ambani, controlled by Reliance Industries Ltd.

The entire stake in Eureka Forbes and SWSL has been sold by the developers and the financing would be used to reduce debt. As a result, the group’s debt amounts to approximately Rs 3,655 crore.

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Ann J. Cox