“The Shapoorji Pallonji-Tata relationship, which spans more than 70 years, was forged on the basis of mutual trust, good faith and friendship,” the company said in a statement.
“Today, Shapoorji Pallonji Group testified before the Supreme Court that the separation of the Tata Group is necessary due to the potential impact that this ongoing litigation could have on livelihoods and the economy,” the company said.
“It is with regret that the Mistry family believes that a separation of interests would better benefit all stakeholder groups,” Shapoorji Pallonji Group said in a press release.
This essentially means that the SP Group, which has an 18.4% stake in Tata Sons through its two investment firms, is willing to sell its stake and exit the company.
This statement comes after a lengthy legal battle that began in December 2016 after Cyrus Mistry was ousted as chairman of Tata Sons in October 2016.
SP Group said Tata Sons has been making “value-destroying business decisions” since Mistry’s firing.
“It is extremely regrettable 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 proceedings. It is a matter of public domain that various issues identified years prior, continue to be in either Tata Steel UK operations, where operating losses have increased by an additional 11 billion rupees in the last three years alone, or in the Group’s aviation businesses.
These actions, or the lack of them, have meant that the total debt of the main companies of the Tata group has increased by approximately ₹100,000 million rupees 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, “said SP Group.
“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, running 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 stemming from the global pandemic. This action was taken to protect the livelihoods of their 60,000 employees and more than 100,000 workers. Tata Hijos’ action to block this crucial fundraiser, without paying attention to the collateral consequences is the latest demonstration of their vindictive mentality, “the company said.
On Tuesday, the Supreme Court restricted Shapoorji Pallonji Group (SP) and Cyrus Mistry from pledging or transferring their shares in Tata Sons Pvt Ltd (TSPL) until October 28.
A bank made up of Chief Justice SA Bobde and judges AS Bopanna and V Ramasubramanian also ordered Tata Sons and the SP Group not to take any further action on the shares that have already been committed until October 28, the next hearing date.
The SP group, which owns 18.37 percent of Tata Sons, had said TSPL moved the high court to block its plan to pledge stock to raise funds and that it reeked of revenge and oppression of minority shareholders’ rights.
On September 5, Tata Sons had moved to high court to prevent the Mistry group from raising capital against its shares.
Through the plea, the Tatas had tried to prevent the SP Group from creating a direct or indirect pledge of shares.
The SP Group planned to raise ₹11 billion rupees from various funds and had signed an agreement with a major Canadian investor to ₹Rs 3,750 crore in the first tranche against a portion of its 18.37 per cent stake in Tata Sons.
The participation of SP Group in the largest commercial house in the country is valued at more than ₹1 lakh crore. In a hearing via videoconference, the high court said it would hear the statement after four weeks and “in the meantime, the parties will maintain the status quo regarding the pledge / transfer of shares.
“We will say status quo on the transfer / commitment and any further action regarding the transfer / commitment already made,” the bank said.
Lead defender CA Sundaram, who came forward for the SP group, said they were being prevented from pledging the shares and “it is wreaking havoc on me.”
On the other hand, lead counsel Harish Salve, representing TSPL, said the point was “something else”, as TSPL has the right to buy the stock at market price, but the SP group was committing it.
“We are tentatively of the opinion that committing is a limited transfer,” the bank noted, saying it will “hold the final hearing in four weeks.
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