Shapoorji Pallonji Group Wants Stakes In All Tata Group Companies As Part Of The Settlement

The SP Group has told the Supreme Court that it estimates its 18.4% stake in the Tata Group's main holding company to be worth over Rs 1.75 lakh crore ($23.5 billion), including its brand valuation.

Cyrus P Mistry with R N Tata, Chairman, Tata Sons. (File Photo? Getty)

Mumbai: Shapoorji Pallonji Group (SP Group) has sought to swap its stake in Tata Sons, which his group values at $24 billion, for shares in the listed companies of India's biggest conglomerate as the former partners move to break ties, four years after Cyrus Mistry was ousted as chairman of Tata Group. The SP Group has told the Supreme Court that it estimates its 18.4% stake in the Tata Group's main holding company to be worth over Rs 1.75 lakh crore ($23.5 billion), including its brand valuation. It's seeking pro-rata shares in listed Tata entities, cash, or any marketable instrument in lieu. A bulk of this $24 billion would probably come from Tata Consultancy Services (TCS), where SP Group estimates its shareholding translates to 13.2% or about Rs 1,35000 crore at current market values. For example, 72% of Tata Consultancy Services Ltd. (TCS) is owned by Tata Sons. SP Group's ownership of 18.37% translates to 13.22% shareholding of TCS valued at Rs. 1,35,000 crore at a present market capitalisation of TCS, said an SP Group statement. According to SP Group, the non-cash settlement would ease Tata's pressure to raise a large quantum of debt, and valuation disputes can be eliminated by doing a pro-rata split of listed assets and pro-rata share of the brand. The pro-rata share of the brand value adjusted for net debt (debt minus cash and cash equivalents) can be settled in cash and/or shares in the listed securities. An expedited valuation can be done for the unlisted companies with a valuer selected by both sides, it said. The Tata brand was valued at $20 billion in its last valuation. The offer comes nearly a month after the Mistrys announced their intention to sever a 70-year relationship with the coffee-to-cars Tata empire. The family has been locked in a bitter courtroom battle with the $113 billion Tata Group as it seeks funds for its own cash-strapped businesses. A Tata Sons spokesperson didn't comment to ABP News query on SP Group's offer. Analysts believe that the offer may be disastrous for listed Tata Group entities if SP Group comes as a financial investor. "It is to be seen how Tata Group reacts to the proposal. If SP Group comes just as a financial investor, the listed firms of Tata Group will fall and lead to an erosion in the Tata Group entities' market capitalisation. This is because the debt-led SP Group will sell the shares to reduce its debt," investment advisor S P Tulsian told ABP News Network. According to SP Group, the settlement would leave the Tatas with more than a 51% stake in TCS, India's biggest software services exporter, and the group's cash cow. Also, any holding above 10% will give the SP Group certain statutory rights under company law, with which Tata Group may be uncomfortable. It led to the abrupt ouster of Cyrus Mistry as Tata Group chairman. The dispute started when Cyrus Mistry, 52, son of billionaire Pallonji Mistry, 91, who controls the 155-year-old SP Group, was abruptly removed as the Tata Group chairman in 2016.