MUMBAI : The equity value of Tata Sons Ltd, the holding company of India’s largest conglomerate, was pegged at $ 70 billion in a recent internal review exercise, said two people familiar with the development of the situation.
This estimate suggests that the Mistry family’s 18.37% stake in Tata Sons is valued at $ 12.86 billion (approximately ??94,000 crores). The Tata group’s net debt is around $ 27 billion, one of the two people said.
“While the legal case with the Mistry family was in court, an internal exercise showed Tata Sons’ worth at around $ 70 billion. The bankers helped the group come up with that value, ”the person said on condition of anonymity.
While the last value attributed to the participation of the Shapoorji Pallonji (SP) group controlled by the Mistry family is greater than the ??80,000 crore declared by Tata Sons lawyer Harish Salve to the Supreme Court, still much lower than the ??The $ 1.75 trillion value that the Shapoorji Pallonji group claimed in court.
In a similar exercise in 2016, the participation of the Shapoorji Pallonji Group was assessed at ??58,441 crores per Tata Sons.
Latest valuation gains momentum as Shapoorji Pallonji Group and Tata Sons may negotiate a split, as the Supreme Court last week refused to get involved in determining the fair value of the Mistry family’s stake in the holding company Tata or the terms of divorce.
The Supreme Court also dismissed the Shapoorji Pallonji group’s claim that he was an oppressed minority shareholder of Tata Sons and overturned an appeals court order that reinstated former Tata Sons chairman Cyrus Mistry, who was ousted in 2016.
Due to the feud with the Tata Group and the increase in debt, Shapoorji Pallonji Group attempted to monetize its stake in Tata Sons and claimed in the Supreme Court that Shapoorji Pallonji Group had initiated a “separation process” with Tata Sons.
Spokesmen for Tata Sons and the Shapoorji Pallonji group did not respond to emails sent Tuesday seeking comment.
Tata Sons, as a holding company, derives income from dividends paid by its key subsidiaries, including Tata Consultancy Services Ltd, Tata Motors Ltd, Tata Steel Ltd and Tata Chemicals Ltd.
Tata Sons received a total stock dividend of ??24,000 crores from its various group companies in fiscal year 2020, with Tata Consultancy alone contributing nearly 90% of the total. Tata Sons reinvests part of its income in the companies of its group.
The Shapoorji Pallonji group, which has been hit hard by the novel coronavirus pandemic, has attempted to raise funds by selling stakes in group companies including Eureka Forbes, Afcons Infrastructure and Sterling and Wilson Solar to repay loans.
In a letter subsequent to the Supreme Court ruling, Cyrus Mistry said: “As a minority shareholder of Tata Sons, I am personally disappointed with the outcome of the judgment in our case. Although I will no longer be able to directly influence the direction of governance of the Tata Group, I hope that the issues I have raised will spark further reflection and influence the individuals concerned to catalyze change. “
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