Shapoorji Pallonji: Tatas value SP’s 18% stake at Rs 80,000 crore | India Business News – Times of India

MUMBAI: Tata Sons opened up a new battlefront with Shapoorji Pallonji (SP) on Tuesday as it valued the minority shareholder’s 18.4% stake in the company up to 61% lower than the latter’s estimate. SP had valued its stake at Rs 1.78 lakh crore, while Tata Sons — in a submission before the Supreme Court on Tuesday — pegged the same at Rs 70,000-80,000 crore.
SP is seeking an exit from the holding company of India’s biggest conglomerate after a seven-decade-old relationship turned sour in the last four years.
Based on Tuesday’s submission, Tata Sons is worth Rs 3.8-4.3 lakh crore and its valuation of SP’s stake is 55-61% lower than the latter’s own calculations. It is not clear whether Tata Sons has considered SP’s proportionate share in the Tata brand value, which was Rs 1.46 lakh crore, according to Brand Finance’s 2020 ranking. SP, as part of its separation proposal, had suggested swapping its Tata Sons stake for shares worth Rs 1.78 lakh crore in listed Tata companies.

The valuation gap means the beginning of another clash between the two revered Parsi groups, which have been locked in a legal battle since 2016, when SP scion Cyrus Mistry was removed from the chairman’s post of Tata Sons in a boardroom coup.
Earlier this year, SP sought to pledge its Tata Sons stake to raise money amid the Covid pandemic, but the attempt was blocked by the holding company by moving the apex court.
Tata Sons told the SC that it was open to buying SP’s share if the latter needed funds. In September, SP announced its decision to exit from Tata Sons as it realised it was stuck with an investment which could not be easily monetised due to restrictive share transfer clauses. A prolonged battle will, however, not do any good for SP as it is hard-pressed for funds for its construction and real estate businesses.
The latest valuation of Tata Sons, based on its estimate of SP’s stake, is not far from the holding company’s 2016 worth of Rs 3.14 lakh crore as calculated by noted chartered accountant Y H Malegam. Tata Sons officials have been citing applicability of illiquidity discounts to the valuation of the holding company.
On Tuesday, Tata Sons also argued before the Supreme Court that though the law empowers a judicial body to appoint and remove a director from the board of a company, its power under section 242 is “nuanced and for specific purpose”. It is the controlling shareholder who has the right to make appointments on the board of the company.
The National Company Law Appellate Tribunal (NCLAT) had removed N Chandrasekaran from the chairman’s post at Tata Sons who was appointed after Mistry’s exit. The NCLAT had reinstated Mistry as the holding company’s chairman. Tata Sons argued that under “normal corporate democracy”, a shareholder with an 18.4% stake would not be able to get a single seat on the board of the company, while a controlling shareholder (Tata Trusts, which holds 68% in Tata Sons) would be able to fill the board with its nominees.
Tata Sons further said that Mistry was not appointed chairman under any right of the minority shareholder. But by reinstating him, the NCLAT went against the majority’s wish, giving the minority the reins of the company, it added.