Shapoorji Pallonji Group creates holding companies for infra and realty verticals to improve cash flows

The Shapoorji Pallonji (SP) Group has embarked on a business financial re-engineering by creating parallel structures for its real estate and infrastructure units under its existing holding companies, SP Finance and SC Finance, officials in the know said.

The move will help improve operating cash flows since investments in long-lead businesses like infrastructure and real estate create timing mismatch, which puts debt burden on the balance sheet, officials said. Earlier all its diverse businesses, ranging from real estate and construction to oil and gas, were housed under one holding company – Shapoorji Pallonji and Co (SPCPL). This structure will help promoters to ensure separate direct investments so that the core businesses are not impacted and the long-lead businesses are managed efficiently, officials aware of the matter said.

“These are learnings from the one-time-restructuring done with banks and we are looking at ways to improve the cash flows in the system,” an official said.

The SP Group did not comment.

The flagship company of SP Group, SPCPL, exited from a one-time restructuring plan in FY22.

Both SP Finance and SC Finance were part of the holding company SPCPL which will now cease to operate as the holding and operating entity for group companies.

Both the holding companies each hold a sizable 47.69% stake in Shapoorji Pallonji Co.

The restructuring, said top group officials, seeks to make the group future-ready to manage its business scale and to ensure greater accountability within its businesses.

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