SP Group sells a quarter of its stake in TCS

Reeba.Zachariah | TNN

Mumbai: the Shapoorji Pallonji (SP) Group has sold a quarter of its stake in Tata Consultancy Services ( TCS ) and raised Rs 400 million rupees, amid credit rating agencies that lowered their debt instruments. The group will use the income to strengthen its balance sheet.

Sources said Sterling Investment Corporation and Cyrus Investments sold 19.90 lakh TCS shares in the open market last week. The two private companies of Shapoor Mistry , President of SP group and his younger brother, Cyrus Mistry , held 73.45 lakh TCS shares (or 0.19% of TCS equity) before the sale. The two now own 53.55 lakh TCS shares (0.14%). The TCS share-sale is part of SP’s asset monetization plan to pare its Rs 30,000-crore debt.

The construction-to-consumer durable enterprise got the TCS shares because of its 18.38% holding in Tata Sons. As a result, when Tata Sons merged its software services division with Orchid Impressions in 2003, SP too became a shareholder of the company. Orchid Impressions , later renamed as TCS , got listed on the domestic bourses in 2004, and is today the second-most valuable company in the country, with a market capitalisation of over $100 billion.

An SP group spokesperson said: “The promoters have periodically infused capital to strengthen the net worth of Shapoorji Pallonji and Co (the group flagship), which will have grown by over 200% in two years. In the last 15 months, the promoters have infused over Rs 2,850 crore into the group. The monetisation of TCS shares is only a small reallocation of capital towards strengthening the group’s balance sheet.”

SP's financial challenges came to light after seeking time to pay the fees owed to the Sterling and Wilson Solar group company. Like other construction, infrastructure and real estate actors, SP has also been affected by the liquidity crisis caused by the breach of IL&FS in September 2018. Since then, the capital increase has become difficult and expensive for developers, since non-bank lenders have become cautious after a series of defaults.