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May 13, 2024

Shapoorji Group Requests Extension for Bondholder Payments Amid Financial Strain

Amidst financial challenges, the renowned Indian realty firm Shapoorji Pallonji Group has reached out to bondholders seeking more time to fulfill payment obligations linked to its subsidiary, Goswami Infratech. According to a letter obtained by Reuters on Monday, the company faces a daunting task of paying approximately 1,400 crore rupees ($167.62 million) to bondholders of Goswami Infratech while servicing the debt of another group entity, Sterling Investment Corp.

The communication, addressed to Axis Trustee Services, outlines the inability of Sterling Investment Corp to secure additional debt, indicating a potential “trigger event” expected to transpire on May 26, 2024. This development underscores the financial strain within the Shapoorji group, raising concerns over its ability to meet its financial commitments on time.

Last year in June 2023, Goswami Infratech had successfully raised 14,300 crore rupees through bonds with a maturity period of two years and ten months, offering a significant yield of 18.75 percent. Notably, the investors in these bonds comprised large private credit funds, reflecting the confidence in the Shapoorji group’s financial viability at the time.

However, the current situation signals a different narrative, with the group’s silence in response to Reuters’ email seeking comment adding to the uncertainty surrounding its financial health. The request for an extension in bondholder payments underscores the challenges faced by the Shapoorji Pallonji Group, as it navigates through a complex web of financial obligations in a tumultuous economic environment.

Shapoorji Pallonji Group, a stalwart in the Indian real estate sector with a legacy spanning over a century, has faced its share of challenges in recent times. The COVID-19 pandemic-induced economic slowdown, coupled with regulatory changes in the real estate sector, has added pressure on the company’s financial performance.

The inability of Sterling Investment Corp to raise fresh debt exacerbates the situation, potentially leading to a default scenario if timely measures are not taken. Such a scenario could have ripple effects, affecting not only the bondholders but also stakeholders across the Shapoorji group’s extensive business portfolio.

The request for more time reflects the group’s efforts to restructure its financial obligations and seek alternative solutions to tide over the current crisis. However, it also highlights the broader challenges faced by the real estate sector in India, which has been grappling with liquidity issues and demand slowdown in recent years.

As the May 26 deadline approaches, all eyes are on the Shapoorji Pallonji Group’s next move and its ability to reassure bondholders and stakeholders about its financial stability. The outcome of this situation could have far-reaching implications not only for the group but also for the Indian real estate industry as a whole.

In conclusion, the Shapoorji group’s plea for an extension in bondholder payments underscores the mounting financial pressure within the organization and highlights the broader challenges facing the Indian real estate sector. As stakeholders await further developments, the resilience and adaptability of companies like Shapoorji Pallonji Group will be put to the test in navigating through these turbulent times.

Jhumpa Lahiri

Jhumpa Lahiri

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