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Photo: Reuters
Photo: Reuters

Settle it amicably

While the two groups have had bitter ties ever since Mistry was ousted as Tata Sons’ boss in 2016, such a deal could give them a workable way out of their dispute. Tata can hardly afford a greater burden of debt

The Shapoorji Pallonji (SP) Group on Thursday filed a scheme of separation from Tata Sons in the Supreme Court, proposing to swap its stake in the Tata Group’s holding firm for shares in Tata companies. Instead of cash for its 18.4% in Tata Sons, Cyrus Mistry’s SP Group seems to expect listed equity slices of a value in proportion to its holding. This value would include Tata Sons’ unlisted assets, such as the Tata brand, and so a third-party valuation would be needed to calculate that part.

As unlisted assets are not easy to put a price on, a wrangle over valuations can’t be ruled out. But the proposal’s selling point is the relief it offers the Tata Group from a fund scramble for an outright stake purchase. While the two groups have had bitter ties ever since Mistry was ousted as Tata Sons’ boss in 2016, such a deal could give them a workable way out of their dispute. Tata can hardly afford a greater burden of debt. But then, its comfort level with Mistry acquiring direct stakes in Tata firms remains unknown. The slices might be too thin for the SP Group to meddle in most Tata companies’ affairs, but its fortunes would still be tied.

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