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Photo: Reuters
Photo: Reuters

‘Group bosses guilty of value destruction’

Always used voting rights for the best interests of Tatas: SP Group

While announcing its decision to end a 70-year-long partnership, the Shapoorji Pallonji Group once again raised concerns on alleged corporate governance violations in the Tata group. The SP Group remains the single largest shareholder of Tata Sons, the group holding company.

The SP Group, which is fighting several court cases with the Tatas, told the Supreme Court on Tuesday that a separation is necessary due to the potential impact this litigation could have on livelihoods and the economy. It said that it was crucial that an early resolution be reached to arrive at a fair and equitable solution reflecting the value of the underlying tangible and intangible assets.

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“As the largest minority shareholder owning an 18.37% stake, the role hitherto played by the SP Group was always one of guardianship with an aim to protect the best interests of the Tata group. The SP Group had always used its voting rights as a shareholder for the best interest of the Tata group," the SP Group said in a statement on Tuesday.

“It is a matter of record that prior to 2000, when the Tata Trusts, being public charitable trusts, couldn’t exercise their voting rights, the same being held by a public trustee, the SP Group voted to protect the best interests of the Tata group. In 2012, when Mr. Cyrus Mistry accepted the position of chairman of Tata Sons, it was not only with a sense of pride, but also with a sense of duty as an ‘insider’ on the board of Tata Sons. The Tata group was going through significant change. A generation of Tata leaders were retiring with implications on the future governance of the group. Several of these leaders who were retiring from the board of Tata Sons also served as trustees of the majority shareholders—Tata Trusts. It is in this context that Mr. Mistry set about trying to establish a governance structure that would institutionalize accountability, and create the right checks and balances, without contravening the new Sebi insider trading law that regulated the flow of information across all stakeholders. Unfortunately, he was removed in October 2016, when he attempted to implement these governance reforms," the SP Group said.

The SP Group raised concerns about what it called “value destructive business decisions" by the current leadership of Tata Sons, including the operations of Tata Steel UK.

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