Tata-Mistry: Time To Separate From Tata, Says Mistry Family
The Mistry family has said it is time to separate from Tata.
“The current situation has forced the Mistry family to sit back and reflect on the past, present and possible future for all stakeholders. The past oppressive actions, and the latest vindictive move by Tata Sons that impact the livelihoods of the wider SP Group community leads to the inexplicable conclusion that the mutual co-existence of both groups at Tata Sons would be infeasible," said a statement by the Mistry family-controlled SP Group.
"The SP-Tata relationship spanning over 70 years, was forged on mutual trust, good faith, and friendship. Today, it is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder groups.”
The statement comes on a day the Supreme Court barred the Mistry group from pledging or selling any Tata shares until Oct. 28, when it starts hearing final arguments in the case.
The SP Group statement says:
- Today, the SP Group stated before the Supreme Court that a separation from the Tata Group is necessary due to the potential impact this continuing litigation could have on livelihoods and the economy.
- They stated that it was crucial that an early resolution is reached to arrive at a fair and equitable solution reflecting the value of the underlying tangible and intangible assets.
While the statement offers no further detail on the process of such a separation, it is expected to be court driven as both sides have made their intent clear in the apex court.
The Tata Group will have to detail its proposal to purchase the stake, including valuation, source of funding, etc. The Mistry side will then have decide if its willing to accept the offer, according to one person close to the matter who spoke anonymously.
According to the person, Tata Sons valuation would be approximately Rs 10 lakh crore, including the holding company’s stakes in the various listed and unlisted companies of the group as well as the Tata brand value. That could put the value of the Mistry family stake at between Rs 1.75-2 lakh crore.
The Mistry family refused to comment beyond the statement they released. Tata Sons declined to comment as well.
Watch | A quick take on the legal and financial contours of the Tata Mistry separation process.
The Tata-Mistry Saga
The Shapoorji Pallonji Group, founded by Cyrus Mistry’s family, has been experiencing financial difficulties and sought to raise funds by pledging shares of Tata Sons, the Tata group holding company in which the Mistry family owns just over 18.37%. It is the second-largest shareholder in Tata Sons after Tata Trusts.
The pledging of Tata Sons shares was opposed by the Tata group that moved an urgent petition in the Supreme Court. Subsequently, the SP Group sent a notice to the Tata Group seeking damages from Tata Sons and its board members for "illegally blocking" the Mistry family's bid to raise funds by pledging shares of the Tata Group’s key holding company Tata Sons.
When the matter came up in the apex court today, the Tata Group said it’s open to buying the Mistry family stake as part of a proposal to help end a years-long legal dispute between the two parties.
The two sides have been locked in a bitter legal battle since 2016 when Cyrus Mistry was ousted as chairman of Tata Sons in a boardroom coup. Since then, Mistry has sought to prove oppression and mismanagement by the group, failing to do so at the National Company Law Tribunal but succeeded at the appellate tribunal. That ruling now stands appealed by the Tatas in the Supreme Court, though the case is yet to begin hearing.
Watch | Lawyers HP Ranina And Rajat Sethi discuss the Tata Mistry separation.