The Shapoorji Pallonji Group told the Supreme Court of India on Tuesday that it would withdraw from Tata Sons provided it gets an early, fair and equitable solution. With this, the 70-year relationship between two of India’s largest groups will come to an end.
The SP Group, which owns an 18.5 percent stake in Tata Sons, said in a statement that a separation from the Tata Group is necessary due to the potential impact this ongoing litigation could have on livelihoods and the economy. “It was crucial that an early resolution be reached to reach a fair and equitable solution that reflected the value of the underlying tangible and intangible assets,” he said.
“The SP-Tata relationship, which spans more than 70 years, was forged on the basis of mutual trust, good faith and friendship. Today, the Mistry family believes with great regret that a separation of interests would better serve all stakeholder groups “. said.
The statement came just hours after the Tata group informed the SC that it was ready to buy the SP group’s stake. The Supreme Court today prohibited the Mistry group from engaging or selling its stake in Tata Sons and asked the Mistries to maintain the status quo until their next hearing on October 28, when it begins to hear final arguments in the case.
As the largest minority shareholder with a stake of 18.37%, the role that the SP Group played until now was always that of guardianship with the aim of protecting the best interests of the Tata group, the group, which is facing a financial crisis due to Corona Pandemic, he said. The SP Group has always used its voting rights as a shareholder in the best interest of the Tata Group.
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“It is a matter of record that before the year 2000, when the Tata Trusts, being public charitable trusts, could not exercise their voting rights, they were in the hands of a Public Trustee, the SP Group voted to protect the best interests of the Tata Group “.
The statement said in 2012, when Cyrus Mistry, the scion of the SP group, accepted the position of president of Tata Sons, it was not only with a sense of pride, but also with a sense of duty as an ‘insider’ on the Board. by Tata Sons. The Tata Group was going through a significant change.
A generation of Tata leaders was retiring with implications for the future governance of the Group. Several of these leaders who were retiring from the Tata Sons Board also served as trustees for the majority shareholders – Tata Trusts. “It is in this context that Mistry set out to try to establish a governance structure that would institutionalize accountability and create the correct checks and balances, without contravening SEBI’s new insider trading law that regulated the flow of information between all interested parties, “the statement said. said.
Unfortunately, he was ousted in October 2016, when he tried to implement these governance reforms. “It is extremely unfortunate that the current leadership of Tata Sons has not only continued to make destructive business decisions of value in a misguided effort to prove a point in these procedures. It is a matter of public domain that various problems identified years earlier continue to plague the group. Whether it’s the operations of Tata Steel UK, where operating losses have increased by an additional 11 billion rupees in the past three years alone, or the Group’s aviation businesses, ”the statement said.
These actions, or the lack of them, have meant that the total debt in the main companies of the Tata group has increased by approximately Rs 100 billion in the last three years. Excluding TCS, losses in the last few quarters of all listed group companies of approximately Rs 14 billion are causing great concern.
“Unfortunately, the impact of these actions continues to hurt minority shareholders, be it the SP Group in Tata Sons or the millions of shareholders of publicly traded companies in the Tata Group,” the statement said.
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Tata Sons has expanded its institutional efforts to suppress and inflict irreparable damage to the SP Group, amid a global crisis triggered by the COVID pandemic. The 150-year-old SP Group is the second largest construction group in the country, executing projects of national importance in India and abroad.
The Mistry family was in the middle of raising funds against the security of their personal property to face the crisis resulting from the global pandemic. This measure was carried out to protect the livelihoods of its 60,000 employees and more than 100,000 migrant workers. Tata Sons’ action to block this crucial fundraiser, without heeding the collateral consequences, is the latest demonstration of their vindictive mentality.
“The current situation has forced the Mistry family to sit and reflect on the past, present and possible future of all stakeholders. The oppressive actions of the past and the latest revengeful measure by Tata Sons impacting the livelihoods of the SP Group community at large leads to the inexplicable conclusion that the mutual coexistence of both groups at Tata Sons would be unfeasible, ”he said.
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