Tata, Mistry separation may hit fresh roadblock over Rs 1 lakh crore valuation mismatch

Tata, Mistry separation may hit fresh roadblock over Rs 1 lakh crore valuation mismatch

The Supreme Court has started hearing final arguments in the legal dispute between Tata Sons Limited and Shapoorji Pallonji (SP) Group’s Cyrus Mistry. But the bitter battle that started with the ouster of Cyrus Mistry as Tata Group chairman four years ago seems to have hit a fresh roadblock.

At the heart of the matter is SP Group’s stakeholding in Tata Sons. On October 29, SP Group had filed an affidavit and pegged the value of its 18.4 percent stakeholding in Tata Group at roughly Rs 1.75 lakh crore. But Tata Sons, the holding company of Tata Group, has rejected the value estimated by the Mistrys.

Mistry’s SP Group wants to separate from the Tata Group by swapping its stake in Tata Sons for shares (marketable securities) or cash to the tune of Rs 1.75 lakh crore.

On Tuesday, Tata Sons’ counsel Harish Salve told the top court that the valuation of SP Group’s 18.4 percent stake in Tata Sons is in the range of Rs 70,000-80,000 crore, much lower than what has been claimed by the Mistrys.

The valuation mismatch could become another roadblock in the settlement between the two groups, who have been engaged in the biggest corporate feud in recent Indian history.

The figure pegged by Tata Group is roughly Rs 1 lakh crore less than what the SP Group has asked for and the marked difference could further stretch the legal battle between the two groups.

The dispute first landed in Supreme Court in September after the Mistry family announced its intention to end ties with Tata Group. The decision was announced by the SP Group after almost four years of legal battles.

It is worth mentioning that the Supreme Court had barred SP Group from pledging or selling any Tata Sons’ shares in September, but the Mistrys came up with an affidavit on October 29 where it mentioned the stake-share swap deal to serve its decades-old tie with Tata Group.

The Tata-Mistry feud started in October 2016 after the sudden ouster of 52-year-old Cyrus Mistry as the chairman of Tata Sons. The bitter boardroom battle soon became legal as the Mistry family approached National Company Law Tribunal (NCLT in Mumbai, alleging mismanagement at Tata Sons.

While NCLT ruled in favor of Tata Group, the order was reversed by the NCLAT in 2019. Tata Sons again challenged the NCLAT ruling in Supreme Court — the final hearings for which is being heard today.