India’s Shapoorji Pallonji Group puts Eureka Forbes on the block again

Photo: Mint

The Shapoorji Pallonji (SP) Group has restarted the sale process of home hygiene products maker Eureka Forbes Ltd, two people aware of the development said.

The cash-strapped group has begun talks with potential buyers, including private equity funds and a well-known consumer appliances company, the people cited above said on condition of anonymity.

The SP Group initiated talks to sell the company popular for its vacuum cleaners and water purifiers last year but had suspended the process mid-way.

“Eureka Forbes is one of the best-known consumer brands in India, and the SP Group was evaluating other structures to monetize the asset without divesting ownership,” said one of the two people cited above. “As part of this, they were engaged with a large Canadian fund to raise debt by pledging the cash flows of Eureka Forbes as collateral,” this person added.

“The transaction (with the Canadian fund) was part of SP Group’s plans to pledge part of its stake in Tata Sons Ltd to raise debt,” said the second person. “But with the deal running into trouble after Tata Sons objected to the transaction and the matter sub judice, the SP Group has decided to exit Eureka Forbes altogether and is seeking an enterprise valuation of around 7,000 crore”. The company did not respond to a request for comment.

A subsidiary of SP Group company Forbes and Co. Ltd, Eureka Forbes has an annual sales of close to 3,000 crore. Its product portfolio includes water purification, vacuum cleaning, air purification and home security solutions. The company says it has 20 million customers, reaching over 1,500 cities and towns in India, and 53 countries.

The Shapoorji Pallonji Group has been under considerable financial strain for a while. In September, it missed a deadline to repay dues to group company Sterling and Wilson Solar Ltd, raising doubts about the group’s ability to service its debt amid a faltering fundraising plan.

In a regulatory filing, Sterling and Wilson Solar, controlled by construction tycoon Pallonji Mistry and his family, said the promoters had repaid only 103 crore out of the 1,000 crore owed to the company.

The company said its promoters will repay the rest of the dues by September 2021.

Established in 1865, the Shapoorji Pallonji Group operates in engineering and construction, infrastructure, real estate, water, energy and financial services, with around 69,000 employees. It is also the single-largest shareholder in Tata Sons, the holding company of the Tata group.

Tata Sons and the Shapoorji Pallonji Group are engaged in a bitter legal battle since Pallonji Mistry’s son Cyrus was ousted as chairman of Tata Sons in 2016.

Mistry was named the sixth chairman of Tata Sons and took over the post in 2012 from Ratan Tata who was retiring.

While initial orders from a lower court favoured the Tata group, in December, the National Company Law Appellate Tribunal (NCLAT) passed an order to restore Mistry as executive chairman of Tata group. The matter is now in the Supreme Court.

In October, Shapoorji Pallonji group offered to swap its stake in Tata Sons for shares in publicly traded Tata group firms, which if accepted by Tata group, could end the running feud.

The article was first published on livemint.com.

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In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

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  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
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