Home / Companies / News /  Hopes of Tata-Mistry truce fade over valuation mismatch

A $13-billion difference in valuation of 18.4% stake in Tata Sons has dimmed hopes of potential truce between the Tata Group and the Mistry family, the single largest shareholder in the Tata Group holding company. On Tuesday, Tata Sons, which has challenged the Mistry family’s move to pledge or sell the minority stake, said that aforesaid stake would be worth 80,000 crore, less than half of what has been claimed by the Mistry family.

Appearing for the Tatas, senior counsel Harish Salve told the apex court bench headed by Chief Justice S.A. Bobde that while Mistry's family has claimed a valuation of over 1.75 lakh crore of its shareholding in Tata Sons, Tata Group’s own estimates are far lower. "As per our calculations, the Pallonji Group shareholding in Tata Sons is worth not more than 70,000 crore to 80,000 crore," Salve told the court.

In October, Tata Sons indicated that it may be open to a planned court monitored separation with the Mistrys but was yet to receive a formal request or proposal from the SP group on this matter. Subsequently, the Mistry family-controlled Shapoorji Pallonji (SP) Group filed a scheme of separation in Supreme Court as part of additional relief in the minority shareholders' oppression case, proposing to swap its entire holding in the group holding company for equivalent shares in listed entities of Tata Group and along with a pro-rata share of Tata brand value (adjusted for net debt against) payable by cash or listed securities. For unlisted companies of Tata Group, the SP Group has sought independent valuation also payable in cash and or in listed securities.

Shapoorji Pallonji Group had earlier offered to swap its stake in Tata Sons for listed and unlisted shares of Tata Group, including the group’s crown jewel Tata Consultancy Services ( TCS), the valuation of which is expected to play a role in the matter, say legal experts. In 2017, the National Company law Appellate tribunal ( NCLAT) in its order had ruled that out of 6,00,000 crore of total investment in Tata Sons Limited till date 'Shapoorji Pallonji Group' had invested approximately 1,00,000 crore, which has however been contested by Tata Group.

While the Shapporji Pallonji Group did not respond to a request for a comment on, a person close to the group said that the Mistry family will counter the valuation estimates put forth by Tatas. “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 1 lakh crore. Since then valuation of TCS has increased significantly, nearly doubled," the person said citing the NCLAT order of 2017. A potential delay in resolution could hamper SP group’s plans to deleverage amid piling debt. The Shapoorji Pallonji 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 amid a faltering fundraising plan.

In a regulatory filing, Sterling and Wilson Solar, controlled by construction tycoon Pallonji Mistry and his family, said the promoters had repaid only 103 crore out of the 1,000 crore owed to the company. The company said its promoters will repay the rest of the dues by September 2021. For Tata Group an immediate pay out to the Mistry’s could affect its aggressive investment plan for various group business 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, another group company has announced plans to enter electric vehicle ( EV) battery manufacturing in a big way.

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