When the interest rate on the debt of a Shapoorji Pallonji Group (SP) unit climbed to 21.75% recently, it did not alarm distressed-debt investors. What surprised lenders was that such pricing is being applied to one of India’s oldest and largest business groups.
In the country’s largest corporate bond sale, SP Group arm Porteast Investment raised ₹28,600 crore in May last year through three-year bonds at 19.75%. The cost rose to 21.75% in December after the company failed to meet a covenant linked to a stake sale, according to people familiar with the matter.
For the 156-year-old conglomerate, the high rates reflect not a lack of assets but a persistent liquidity squeeze and limited options to monetise its most valuable holding — Tata Sons.
The SP Group, promoted by the Mistry family, owns 18.4% of Tata Sons, the holding company of the Tata Group. The stake is valued at an estimated ₹2.5–3 lakh crore but remains largely illiquid. “They own valuable assets, but the crown jewel cannot be easily sold or monetised,” said the credit head of a global investment firm.
Tight Transfer Restrictions
The group has been pushing for an initial public offering of Tata Sons, which would unlock value, but there is no clarity on timing. At the same time, Tata Sons’ Articles of Association place tight restrictions on share transfers, a position repeatedly reinforced by Tata Trusts.
SP Group’s total debt is estimated at around ₹60,000 crore across promoter entities and its real estate and construction businesses. While consolidated debt was reduced sharply after peaking during the Covid-19 period, refinancing pressure remains high.
In 2021, promoter entity Sterling Investment Corporation raised $2.6 billion (about ₹19,240 crore) from Ares SSG and Farallon, pledging a 9.1% stake in Tata Sons and real estate assets. That borrowing matured in March 2025. In May 2025, the group raised a record $3.4 billion to refinance earlier debt.
The three-year, zero-coupon rupee bond carried a yield of 19.75%, among the highest for large corporate issuances in India.
Separately, Cyrus Investments, another promoter entity, raised ₹14,300 crore in June 2023 at 18.75% against a 9.18% Tata Sons stake. This facility matures in April 2026.
Though the group has sold assets — including Eureka Forbes and Gopalpur Port — and listed Afcons Infrastructure to raise ₹5,430 crore, upcoming maturities continue to strain liquidity.
Distress Level Pricing
“SP is asset-heavy but liquidity-poor,” said the chief executive of a non-bank lender. “Net worth may be around $30 billion, but cash flows are tight. That is why lenders are charging distress-level rates.”
Lenders also factor in group history. In September 2023, Sterling & Wilson Renewable Energy, the group’s renewable EPC arm, missed part of a scheduled loan repayment, triggering a downgrade to default. Reliance Industries acquired a 40% stake in the company in 2021.
Despite the elevated rates, lenders remain confident the group will service its obligations. “It is seen as too big to fail,” the executive said. “But the pricing shows the stress beneath the surface.”
A Shapoorji Pallonji Group spokesperson declined to comment. People close to the group said it expects to refinance near-term maturities by March and is hoping for lower borrowing costs.