Description

Godrej Properties Ltd has proposed changes to the Debenture Trust Deed dated July 4, 2023 for INR 1,500 Cr Non-Convertible Debentures, removing several broad covenants and incorporating them into management representations.

Summary

Godrej Properties Ltd (GPL) has proposed amendments to the Debenture Trust Deed dated July 4, 2023 for Non-Convertible Debentures worth INR 1,500 Crore. The amendments involve deletion of five broad covenants from clauses 2.3(i), 2.3(iii), 2.3(viii), 2.3(xv)(b), and 2.3(xxiv)(c) of the Trust Deed. These covenants are being removed as they are open-ended in nature and the statutory auditor is unable to provide certification. The covenants will be incorporated into management representations instead. All changes have received approval from the Debenture Trustee.

Key Points

  • Affects NCDs with ISINs: INE484J08048 and INE484J08030
  • Total NCD issuance amount: INR 1,500 Crore
  • Original Trust Deed dated: July 4, 2023
  • Five covenants being deleted and moved to management representation
  • Reason for changes: Statutory auditor unable to certify broad, open-ended covenants
  • Debenture Trustee has approved all proposed changes

Regulatory Changes

Deleted Covenants

Clause 2.3(i): Authorization and Compliance

  • Removed requirement to obtain, comply with and maintain authorizations necessary for business operations and Transaction Document obligations
  • Previously required supplying certified copies to Debenture Trustee

Clause 2.3(iii): Disclosure Document Compliance

  • Removed requirement to comply with all provisions of Disclosure Documents and Transaction Documents until Redemption Date

Clause 2.3(viii): Tax and Governmental Charges

  • Removed requirement to pay and discharge all taxes, rates, rents and governmental charges before penalties attach (unless contested in good faith)
  • Replaced with requirement that Issuer shall make all filings required under Applicable Laws

Clause 2.3(xv)(b): Authorization Maintenance

  • Removed assurance to obtain, comply with and maintain all necessary authorizations
  • Previously required supplying certified copies to Debenture Trustee

Clause 2.3(xxiv)(c): Litigation Disclosure

  • Removed requirement to supply details of suits, litigation, arbitration or administrative proceedings that are current, threatened or pending
  • Previously covered proceedings that could restrain Issuer’s rights or have Material Adverse Effect

Compliance Requirements

  • GPL will incorporate the deleted covenants into management representations
  • Statutory auditor will not be required to certify these specific covenants going forward
  • Debenture holders should note the revised structure of covenant compliance
  • The changes apply to both ISIN INE484J08048 and INE484J08030

Important Dates

  • Original Trust Deed Date: July 4, 2023
  • Circular Date: November 10, 2025
  • Redemption Date: Until expiry (as referenced in deleted covenants)

Impact Assessment

For Debenture Holders:

  • The amendments are primarily procedural and administrative in nature
  • Covenant obligations continue but shift from auditor-certified to management-represented format
  • Debenture Trustee approval suggests no material adverse impact on debenture holder protections
  • Transparency may be slightly reduced as management representations are less stringent than auditor-certified covenants

For Godrej Properties:

  • Reduces compliance burden related to statutory auditor certification
  • Addresses practical challenges with certifying broad, open-ended covenants
  • Maintains substantive obligations through management representation mechanism
  • Streamlines reporting and certification processes

Market Impact:

  • Limited direct market impact as changes are technical and procedural
  • May set precedent for other issuers facing similar auditor certification challenges
  • Demonstrates ongoing evolution of debenture trustee deed practices in Indian markets

Impact Justification

Technical amendments to debenture trust deed covenants that affect INR 1,500 Cr NCDs. Changes are procedural in nature, shifting broad covenants to management representations due to auditor certification challenges. Approved by Debenture Trustee.