The Shapoorji Pallonji Group (SP) has sought a prorated division of all Tata Sons assets based on its 18.4 percent stake in the holding company of the conglomerate Tata, the group said in its liquidation filings in Court Supreme
The SP group has sought a direct stake in all of the Tata group’s publicly traded entities, including a 13.22% stake in the conglomerate’s crown jewel, Tata Consultancy Services. It claimed a pro-rata share of the Tata brand and requested a neutral third-party valuation for unlisted assets adjusted for net debt.
The SP Group, one of India’s largest construction companies, has an 18 percent stake in Tata Sons, but the two groups have been embroiled in a legal battle since 2016 when Cyrus Mistry, a descendant of the family that controls the SP Group, was fired. as president of Tata Sons.
The SP Group said in the statement that, as a non-cash settlement, it should obtain prorated shares in listed entities of the Tata Group where Tata Sons currently owns a stake. “For example, 72% of Tata Consultancy Services Ltd. (TCS) is owned by Tata Sons and SP Group’s 18.37% ownership translates to a 13.22% stake in TCS (valued at Rs. 1 , 35,000 crore to TCS’s current market capitalization), ”the Group said in its presentation.
The prorated portion of the brand value adjusted for net debt (ie debt minus cash and cash equivalents) may be settled in cash and / or listed securities. For unlisted companies, an expedited valuation can be done with an appraiser selected by both parties, he said. The Tata brand was valued at $ 20 billion based on its latest valuation.
The SP Group said that the “faster to implement” deal is a win-win deal, as control would remain with Tata Sons and it would continue to be a promoter of the group’s companies and would also enjoy a control premium over its participation. “In case Tata Sons does not want to dilute its participation in certain companies, the SP Group could accept the value in cash or in shares of TCS,” he said. Also, this deal will not increase Tata Sons’ debt to buy Mistry group shares, he said.
The same scheme could also be applied to companies in the Tata group that have a stake in Tata Sons to provide them with liquid assets instead of their shares and strengthen their net worth by more than Rs 100,000 crore. The effective ownership of the Tata Trusts would be close to 100 percent thereafter from the current 66 percent once the Mistry family exits, the statement said.
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