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MUMBAI : The equity value of Tata Sons Ltd, the holding company of India’s largest conglomerate, was pegged at $70 billion in a recent internal valuation exercise, two people aware of the development said.

This estimate suggests that the Mistry family’s 18.37% stake in Tata Sons is valued at $12.86 billion (around 94,000 crore). The Tata group’s net debt is close to $27 billion, one of the two people said.

“While the legal matter with the Mistry family was in the court, an internal exercise showed the value of Tata Sons at around $70 billion. Bankers helped the group arrive at this value," the person said on condition of anonymity.

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While the latest value ascribed to the Mistry family controlled Shapoorji Pallonji (SP) Group’s stake is more than the 80,000 crore stated by Tata Sons counsel Harish Salve in the Supreme Court, it is still much lower than the 1.75 trillion value that Shapoorji Pallonji Group had claimed in the court.

In a similar exercise in 2016, Shapoorji Pallonji Group’s stake was valued at 58,441 crore by Tata Sons.

The latest valuation assumes significance as Shapoorji Pallonji Group and Tata Sons may negotiate a separation, with the Supreme Court last week refusing to get involved in determining the fair value of the Mistry family’s stake in the Tata holding company or the terms of the divorce.

The Supreme Court also rejected Shapoorji Pallonji Group’s claim that it was an oppressed minority shareholder in Tata Sons and set aside an appeals court order that reinstated Tata Sons’ former chairman Cyrus Mistry, who was ousted in 2016.

Due to the feud with the Tata group and burgeoning debt, Shapoorji Pallonji Group has been trying to monetize its stake in Tata Sons and had claimed before the Supreme Court that Shapoorji Pallonji Group had initiated a “process of separation" with Tata Sons.

Spokespeople for Tata Sons and Shapoorji Pallonji Group did not respond to emails sent on Tuesday seeking comment.

Tata Sons, as a holding company, earns income from the dividends paid by its key subsidiaries, including Tata Consultancy Services Ltd, Tata Motors Ltd, Tata Steel Ltd and Tata Chemicals Ltd.

Tata Sons earned a total equity dividend of 24,000 crore from its various group companies in FY2020, with Tata Consultancy alone contributing nearly 90% of the total. Tata Sons reinvests a part of its income in its group companies.

Shapoorji Pallonji Group, which has been hit hard by the novel coronavirus pandemic, has been trying to raise funds by selling stakes in group companies, including Eureka Forbes, Afcons Infrastructure and Sterling and Wilson Solar to repay loans.

In a letter after the Supreme Court’s ruling, Cyrus Mistry said: “As a minority shareholder of Tata Sons, I am personally disappointed by the outcome of the judgement with respect to our case. Although I will no longer be able to influence the direction of governance of the Tata group directly, I hope that the issues I have raised, will cause deeper reflection and influence individuals concerned to catalyze change."

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