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Wednesday, January 27, 2021

Tata Sons rejects SP Group separation offer as ‘nonsense’

The SP Group had offered a pro-rata division of all the assets of Tata Sons as part of the settlement and had valued its stake at Rs 1.75 lakh crore.

By: ENS Economic Bureau | New Delhi | Updated: December 11, 2020 5:00:51 am
Former Tata group chairman Cyrus Mistry.

Tata Sons on Thursday rejected the non-cash settlement offer extended by the Shapoorji Pallonji (SP) Group in lieu of its 18.4 per cent stake in the holding firm. The SP Group had offered a pro-rata division of all the assets of Tata Sons as part of the settlement and had valued its stake at Rs 1.75 lakh crore.

“It’s nonsense. This kind of relief cannot be granted. I am opposing it,” Tata Sons counsel Harish Salve told a Bench led by the Chief Justice of India. Salve added that if this proposal is accepted it would leave Tata Sons with the problem of minority shareholding in all its group firms instead of the holding firm where this problem exists today.

The CJI queried if the proposal is “tenable” at this stage.

In its filing before the SC on October 29, the SP Group has sought a direct stake in all the listed companies of the Tata Group, which includes a 13.22 per cent stake in Tata Consultancy Service based on the formula suggested by it. It had said that as per this scheme its stake in other listed firms of the group would be below 10 per cent. It had also sought a pro-rata share of the Tata brand and asked for a neutral third-party valuation for the unlisted assets adjusted for net debt.

Earlier, on Tuesday during the course of the hearing, Salve had pegged the valuation of the Shapoorji Pallonji Group’s 18.4 per cent stake anywhere between Rs 70,000 to Rs 80,000 crore. On Thursday, Salve said the court can only ask Tatas to buy out the minority stake at fair market value and SP Group’s proposal is “akin to winding up Tata Sons”. —FE

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