Shapoorji Pallonji Group informed the Supreme Court that it would exit Tata Sons so as to end the long-standing and bitter dispute with the Tata group, provided an early, fair, and equitable solution was reached.
The SP group owned by the Mistry family which holds 18.37% stake in Tata Sons is its largest minority shareholder. According to the SP Group, a separation from the Tata group was necessary due to the potential impact the ongoing litigation could have on livelihoods and the economy.
Few hours after the Tata group informed the Top Court that it was ready to buy out the stake held by SP group, the SP Group announced that it was ready to exit Tata Sons. With this, the 70-year-old relationship between the two of India's biggest groups might come to an end if the Tatas agree to buy out the stake.
"There will now be negotiations between the two. It's a step in the right direction," said S P Ranina, a senior corporate lawyer, who had first advised both sides to settle the issue.
The SP group is expecting a valuation of Rs. 1.78 trillion for its stake, valuing the entire Tata Sons at Rs. 9.7 trillion, or Rs. 2.4 crore per share.
According to the statement by the SP group, "It is crucial that an early resolution is reached to arrive at a fair and equitable solution reflecting the value of the underlying tangible and intangible assets."
"The SP-Tata relationship spanning over 70 years was forged on mutual trust, good faith, and friendship. Today, it is with a heavy heart that the Mistry family believes that a separation of interests would best serve all stakeholder groups," it said.
After the hearing on September 22, the Apex Court barred the Mistry group from pledging or selling its stake in Tata Sons and asked it to maintain the status quo until its next hearing on October 28, when it will start hearing the final arguments in the case.
The SP group in its statement said the role hitherto played by it was always one of guardianship "with an aim to protect the best interests of the Tata group".
Unfortunately, the statement said, Cyrus was removed in October 2016, when he attempted to implement these governance reforms. "It is extremely unfortunate that the current leadership of Tata Sons has not only continued to take value-destructive business decisions in a misguided effort to prove a point in these proceedings. It is a matter of public record that several issues identified years earlier continue to plague the group -- be it the operations of Tata Steel UK, where over the last three years alone the operational losses have increased by an additional 11,000 crores, or the group's aviation businesses," it said.
The Mistry family was in the midst of raising funds against the security of their personal assets to meet the crisis arising from the global pandemic. The action by Tata Sons to block this crucial fundraising, without any heed for the collateral consequences, is the latest demonstration of their vindictive mindset, the SP group said.
The fundraising was crucial for the Mistry group as its construction business is under pressure due to the pandemic. Besides, the SP group has defaulted on loans taken from its listed entity S&W Solar.
According to SP Group, "The current situation has forced the Mistry family to sit back and reflect on the past, present and possible future for all stakeholders. The past oppressive actions, and the latest vindictive move by Tata Sons that impact the livelihoods of the wider SP Group community leads to the inexplicable conclusion that the mutual co-existence of both groups at Tata Sons would be infeasible," it said.
The tiff started when Cyrus Mistry was removed by the Tata Sons board from his position as Chairman in October 2016 – just a few months before Mistry's term was to expire. Since then, both sides are litigating over the rights of minority shareholders in appointing a Director on the board of Tata Sons and whether the Tata Trusts can veto the decisions of the Tata Sons board.