Shapoorji Pallonji Group demands separation from Tata Group in the Supreme Court

NEW DELHI: The Shapoorji Pallonji Group (SP) on Thursday formally sought separation from Tata Group in the Supreme Court. The SP Group, in its filing, has sought a pro-rata division of all Tata Sons assets based on its 18.37 per cent stake in the holding company of the Tata conglomerate.

The Group said that the value of its stake in Tata Sons is more than Rs 1.75 lakh crore. It has 13.22 per cent shareholding valued at Rs 1.35 lakh crore in Tata Consultancy Services (TCS).

“Disputes over valuation can be eliminated by doing a pro-rata split of listed  assets (share price value is known) and pro-rata share of the Brand (Brand  valuation already done by Tata and published). A neutral third-party valuation  can be done for the unlisted assets adjusted for net debt (i.e. debt less cash),” SP Group said in its filing.

“As a non-cash settlement, SP Group will be given pro-rata shares in the listed entity(ies) of the Tata Group where Tata Sons currently owns stake… For example, 72% of 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 present market capitalisation of TCS.”

The Supreme Court is hearing the corporate tussle between the two conglomerates that began after the Tatas sacked Cyrus Mistry as the Chairman of the Group in October 2016. 

Tata Group on October 15 said that it did not receive any formal request or proposal from the  Shapoorji Pallonji Group to separate itself from the Tata Group. SP Group on September 22 had told the Supreme Court that it is ready to sell its stake in Tata after being together for over 70 years. SP Group said pro-rata separation of assets and liabilities would be a fair and equitable solution to all stakeholders and a largely non-cash settlement would ease pressure on Tata to raise a large quantum of debt. 

According to SP Group, Tata Sons would continue to have control over the underlying assets 
(and >51% stake in TCS) if they go ahead with their proposed scheme. SP Group added that the same scheme could also be applied to Tata group companies that have shareholding in Tata Sons to provide them with liquid assets in lieu of their shares, and bolster their net worth by over Rs 1 lakh crore.