Shapoorji Pallonji Group plans to offload assets to pay down debt after rating downgrade by ICRA

Following the rating downgrade of at least five companies in Shapoorji Pallonji Group last year, chairman of the firm Pallonji Mistry is now reportedly trying to offload some of the assets and pay down debt, a media report said.

“We are in the process of divesting more real estate assets and raising funds. We are hopeful about restoring the ratings,” a group spokesman was quoted as saying by Bloomberg.

Around Rs 650 crore ($91 million) has already been infused into the company and the firm has divested certain assets including Chennai IT park, the news agency added, citing the spokesman.

Representational image. Reuters

Representational image. Reuters

In November last year, citing muted sales and weak performance of the group's real estate business, rating agency ICRA had downgraded long-term ratings assigned to diversified firm Shapoorji Pallonji's Rs 18,500-crore fund-based and non-fund based bank facilities.

The agency had downgraded the rating assigned to the Rs 18,500-crore fund-based and non-fund based bank facilities to AA from AA+ and had reaffirmed the short-term rating at A1+. It had also reaffirmed the short-term rating of A1+ on the Rs 2,500 crore commercial paper (CP) programme.

"The rating has been downgraded on account of muted sales and continued cost pressure, which has led to a weak performance of the group's real estate portfolio and slower-than-anticipated progress on asset monetisation," ICRA had said.

This, along with the funding support provided to the group and subsidiary companies, primarily real estate SPVs, has resulted in an increase in the standalone borrowing levels, contrary to the agency's expectations of a reduction.

With a healthy order book of over Rs 1 lakh crore, the group had said it was eyeing Rs 45,000 crore of revenues this fiscal.

The group, which has grown at a CAGR of 22 percent over the past five years, is also planning to enter new geographies and expects to grow at 20-22 percent over the next two years.

With input from PTI

 

 

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Updated Date: Jan 23, 2019 16:11:32 IST