SP Group Back In Business As Fortunes Revive In Post Pandemic Era

Shapoorji Pallonji and Company Private Limited (SPCPL), the flagship company of the 150-year-old SP Group, has successfully exited from the one-time debt restructuring scheme by selling a part of its assets and pledging a part of its stake in the investment firms.

As the company effected a turnaround in fiscal 2022 after the Covid-19 pandemic hit its core real estate business in FY 2021, experts say the group is back in business with Pallonji Mistry’s sons now leading the businesses.

In early 2012, Mistry had handed over the day-to-day operations of the group to his elder son, Shapoor, while his younger son, Cyrus, took over as the executive chairman of Tata Sons — the biggest conglomerate in India — later in the year in October. Mistry had divided his stakes in various investment companies equally between his two sons quite early.

Most of the group’s construction and real estate businesses are held by SPCPL as subsidiaries and joint ventures, but they fell into a financial crisis after the pandemic struck in March 2020. As the cash flows from its real estate projects dried up, the flagship company opted for debt restructuring under the Reserve Bank of India guidelines issued in August-September 2020.

ALSO READ: Towering legacy: Pallonji Mistry's business achievements span continents

In April this year, the group said that it settled the company’s debt by making a one-time payment of Rs 12,450 crore to its 22 lenders, leaving its balance sheet with a Rs 3,600-crore loan. Of this, the promoters raised around Rs 11,000 crore by pledging stake in the investment companies that are holding shares in Tata Sons. The family owns 18.4 per cent stake in Tata Sons. The net worth of the Pallonji family is pegged at $29 billion by Bloomberg, taking into account their stake in Tata Sons and their construction business.

At Rs 12,450 crore, Shapoorji Pallonji & Com­pany’s one-time settlement was the largest in the system. The group had sought two years for settling its dues but managed to come out of it within one year, experts said. According to company filings, it made a profit of Rs 337 crore on revenues of Rs 7,583 crore in the fiscal year ending March this year as compared to a loss of Rs 1,396 crore on revenues of Rs 6,457 crore in the pandemic-hit fiscal year ending March 2021.

The SP Group’s 60-year-old relationship with the Tata group was roiled by the Tata Sons board’s removal of Cyrus Mistry as chairman of the Tata group in October 2016, much ahead of his five-year tenure, leading to a messy legal battle for years. In March last year, the Supreme Court sided with the Tatas saying that Mistry’s ouster was in accordance with the law.

The repayment was enabled by the Mistry family by infusing over Rs 5,100 crore into the company in FY22. The group also received Rs 3,750 crore from monetising two of its assets — Eureka Forbes and Sterling Wilson Renewable Energy in September and October last year. The group had also reportedly raised Rs 4,000 crore from lender HDFC after pledging shares of Sterling Investment Corporation, which owns 9.19 per cent in Tata Sons, the core holding company of the Tata group.

Experts say the group is regaining ground. “The SP Group is built on a firm foundation. I have no doubt that they will find their way back from their over-leveraged situation. Right now, it is work in progress. The big thrust for them remains real estate, infrastructure and construction. Their attention will be there, though they have cut their involvement in renewable energy,” Shailesh Haribhakti, chairman, Shailesh Haribhakti & Associates, who has worked with the group, said.

“The group’s contribution is immense in real estate and construction. I remember going to Oman in the 1970s and seeing the palace of the Sultan of Oman, which was built by the SP Group. It was quite a feat. Pallonji Mistry built wonderful structures and he will be remembered for that as well as for his charitable works,” Nadir Godrej, chairman, Godrej Industries, said.

Among the landmarks built by the SP Group include the Reserve Bank of India, the Bombay Stock Exchange, Taj Mahal Palace, the Hong Kong and Shanghai Bank, Grindlays Bank and Standard Chartered Bank in Mumbai. After the 2008 Mumbai attacks, the company was involved in the repairs and renovation of the Taj Mahal Palace hotel. Other notable projects built by the SP group include the Jumeirah Lake Towers in Dubai and Ebene Cyber City in Mauritius.