Shapoorji Pallonji plans to sell Rs. 6,600 crore debentures against Tata Sons shares

The promoters of Sterling Investment Corporation, an entity of Shapoorji Pallonji & Company Private Ltd., own a total of 9.185 per cent stake in Tata Sons which will be pledged to raise Rs. 6,600 crores.

Pallonji Mistry owned Shapoorji Pallonji & Company Private Limited is on course to raise Rs. 6,600 crores from investors by issuing debentures, according to news reports. The debentures will be issued against shares of Tata Sons as the Mistry Group owns an 18 per cent stake in the company.

In a regulatory filing with the Registrar of Companies on September 25, Sterling Investment Corporation stated that the debentures sold to investors will be secured against shares of Tata Sons. The promoters of Sterling Investment Corporation, an entity of Shapoorji Pallonji & Company Private Ltd., own a total of 9.185 per cent stake in Tata Sons which will be pledged to raise Rs. 6,600 crores, the report said. 

Moreover, the report also stated that the plan to sell debentures to investors is being implemented by Shapoorji Pallonji promoters to raise money to make advance payments of bank loans taken by several companies under the Mistry Group.

Aside from that, the money will be utilised by the Mistry Group as working capital to facilitate the development of high-value projects such as oil drilling infrastructure etc. undertaken by the various firms under the Mistry Group.

Prior to this, Sterling Investment Corporation had pledged its stake in Tata Sons against Shapoorji Pallonji’s outstanding loans worth Rs. 2,800 crores with Standard Chartered Bank. The news report mentions that the outstanding loans have already been paid and the shares were released by the bank. 

This move by the Mistry group is being speculated to become a source of controversy as per legal experts as Tata Sons, the holding company of had Tata Group, has made objections to similar plans executed by the Mistry Group in the past.

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