An elephant-sized elephant-sized difference in views about how much the Pallonji Mistry family’s stake in Tata Sons Ltd is worth has put paid to hopes of a quick truce between the Tata group holding company and its single-largest shareholder.
On Tuesday, Tata Sons, which has challenged the Mistry family’s move to pledge or sell its 18.4% stake in Tata Sons, claimed that the shares are worth a maximum of Rs 80,000 crore, less than half of the Rs 1.75 lakh crore value ascribed by the Mistry family controlled Shapoorji Pallonji (SP) Group.
Appearing for the Tata group, senior counsel Harish Salve told a Supreme Court bench headed by Chief Justice SA Bobde that the group’s estimate of the value of the stake is far lower than what has been claimed.
“As per our calculations, the Pallonji Group shareholding in Tata Sons is worth not more than Rs 70,000 crore to Rs 80,000 crore,” Salve told the court.
In October, Tata Sons indicated that it may be open to a court-monitored separation with the Mistry family but was yet to receive a formal request or proposal from the SP group on this matter. Subsequently, the SP group filed a scheme of separation in the Supreme Court as part of the minority shareholders’ oppression case, proposing to swap its entire stake in Tata Sons for equivalent shares in its listed units, along with a pro-rata share of the Tata brand value (adjusted for net debt) payable in cash or listed securities. For the unlisted Tata group firms, the Mistry family sought an independent valuation followed by payment in cash or shares in listed companies.
In 2017, the National Company Law Appellate Tribunal (NCLAT), in its order, ruled that out of Rs 6 lakh crore of investments in Tata Sons till date, the SP group invested approximately Rs 1 lakh crore. This has been contested by the Tata group. While the SP group did not respond to a request for comment, a person close to the group said the Mistry family will counter the valuation estimates put forth by the Tata lawyer. “Please refer to a previous NCLAT order of 2017 on maintainability, which today has achieved finality in law. That order recorded a value in excess of Rs 1 lakh crore,” the person said, citing the NCLAT order.
{{/usCountry}}In 2017, the National Company Law Appellate Tribunal (NCLAT), in its order, ruled that out of Rs 6 lakh crore of investments in Tata Sons till date, the SP group invested approximately Rs 1 lakh crore. This has been contested by the Tata group. While the SP group did not respond to a request for comment, a person close to the group said the Mistry family will counter the valuation estimates put forth by the Tata lawyer. “Please refer to a previous NCLAT order of 2017 on maintainability, which today has achieved finality in law. That order recorded a value in excess of Rs 1 lakh crore,” the person said, citing the NCLAT order.
{{/usCountry}}A potential delay in resolution could hamper the cash-strapped SP group’s plans to pare debt. The group has been under considerable financial strain for a while. In September, it missed a deadline to repay dues to group company Sterling and Wilson Solar Ltd, raising doubts about the group’s ability to service its debt. In a regulatory filing, Sterling and Wilson Solar, controlled by construction tycoon Pallonji Mistry and his family, said the promoters had repaid only Rs 103 crore out of the Rs 1,000 crore owed to the company. The company said its promoters will repay the rest of the dues by September 2021. For the Tata group, an immediate payout to the Mistrys could affect its aggressive investment plans for various group businesses, especially e-commerce and new technologies for which it has earmarked significant investments.
Mint reported in December that Tata group is in advanced talks to buy a controlling stake in online grocery platform Bigbasket for around $1.3 billion. Tata Motors Ltd has announced plans to enter battery manufacturing for electric vehicles in a big way.