Shapoorji Pallonji Group Seeks Pro-rata Shares in Listed Entities and Cash or Listed Securities for Other Entities of Tata Group

The Shapoorji Pallonji (SP) group headed by Cyrus Mistry, in an affidavit filed before the Supreme Court (SC), is seeking separation from Tata Sons Ltd. As non-cash settlement, the SP group proposal seeks shares in listed entities of Tata group on pro-rata basis and cash or listed securities for unlisted companies. The value of 18.37% stake of the SP group in Tata Sons is more than Rs1.75 lakh crore.

"Non-cash settlement will ease pressure on Tata to raise a large quantum of debt. It will minimise room for dispute on valuation, value of listed entities on last traded price, and value of brand as per the last valuation report. Tata Sons would continue to enjoy control over underlying assets. A similar scheme can be used to provide liquidity to Tata Group companies. This will be quicker to implement with minimal disruption to operating companies," the affidavthe SP Group in Tait filed by the SP group says.  

According to SP group, Tata Sons is a core investment company and is the holding company for the Tata group; its value arises from its stake in listed equities, non-listed equities, the brand, cash balances and immovable assets. "Tata Sons is effectively a two-group company, with the Tata Group comprising Tata Trusts, Tata family members and Tata companies holding at around 81.6% of the equity share capital, and the Mistry family owning the balance 18.37%," the SP group says.

Explaining the scheme of separation, the SP group says, disputes over valuation can be eliminated by doing a pro-rata split of listed assets (since share price value is known) and pro-rata share of the brand (as brand valuation already done by Tata and published). A neutral third-party valuation can be done for the unlisted assets adjusted for net debt or debt less cash, it added.

It proposes, "As a non-cash settlement, SP group to be given pro-rata shares in listed entity(ies) of the Tata Group where Tata Sons currently owns stake. For example, 72% of Tata Consultancy Services Ltd (TCS) is owned by Tata Sons. SP Group's ownership of 18.37% translates to 13.22% shareholding of TCS, which is valued at about Rs1,35,000 crore at the present market capitalisation of TCS. Pro-rata shares of brand value adjusted for net debt or debt less cash and cash equivalents can be settled in cash and / or in listed securities. For the unlisted companies, an expedited valuation can be done with a valuer selected by both sides. This can be settled in cash and /or in listed securities."

According to SP group, the pro-rata separation of assets and liabilities would be a fair and equitable solution to all stakeholders.

"By proposing this remedy, the SP group seeks to propose a resolution that would take care for the best interest of both shareholders and all stakeholders of Tata Sons. A separation of interests would equitably give the SP group, as shareholders of Tata Sons, access to their proportionate share of value in Tata Sons and would not let two warring shareholders to have to live with each other only under fiat of a court," the affidavit filed by SP group says.

During the previous hearing, the Supreme Court had ordered a status quo for creating pledges or encumbrances by SP group on shares of Tata Sons.

Soon after the SC hearing, the SP group stated that it was time for them to separate from the Tata group.

In a release, the SP group had said, "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. 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."

In September 2020, Tata Sons had filed an urgent petition before the apex court requesting to restrain the SP group from raising capital by pledging their shares in the holding company.
 
Cyrus Mistry, a scion of the wealthy Shapoorji Pallonji family that owns stake in Tata Sons, has been locked in a legal battle with Tata Sons and Tata family head Ratan Tata after he was unceremoniously ousted as the chairman in October 2016 in a coup.
 
According to reports, Mr Tata and Mr Mistry had a fallout over key investment decisions. Mr Mistry had taken over as the chairman in 2012 after Mr Tata announced his retirement.

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    COMMENTS

    mahesh.bhatt

    4 weeks ago

    This is Karma of 80 companies shareholders wealth ill distributed now at wars?Branded as most Ethical Co & Best Group to work with is tearing into shreds apno Ratan & Cyrusbhai's Mahesh Bhatt

    mahesh.bhatt

    4 weeks ago

    Enjoy 1st of its unkind Parsi vs Parsi Fadu Faada Fadide types deekra? Tata ne Bata banaau?mahesh Bhatt

    Power shock: Uday didn't check discom losses, RBI says another bailout needed
    One of the biggest reforms in the power sector, the Uday or the Ujjwal Discom Assurance Yojana, has failed to nursing the stressed electricity discoms back to health.
     
    Rather than easing financial stress of state-run discoms, the utilities currently are back in a crisis situation with rising levels of losses and an ever-increasing debt burden.
     
    The situation has reached such alarming levels that a recent report by Reserve Bank of India (RBI) on state finances has indicated that another round of bailout may be required to bring some degree of balance to the sector.
     
    Besides, the apex said that the financial position of discoms is expected to weaken further in 2020-21 as the Covid-19 related lockdown has severely impacted power demand.
     
    "Even post-UDAY, state owned enterprises in power distribution (Discoms) continue to impart significant downside risk (leading to higher states' liabilities) with no visible signs of turnaround. States' outstanding liabilities increased by 1.5 per cent of GDP due to UDAY in 2015-16 and 2016-17; however, despite this steep fiscal cost, discom losses since then have reached pre-UDAY level of 0.3 per cent of GDP in 2018-19," RBI said in its report on state finances.
     
    In fact, adjusted for revenue grants made under UDAY - which are transitory and in the nature of accounting transfers, discom losses are significantly higher in 2018- 19 vis-a-vis 2015-16.
     
    Estimates of the revenue gap per unit of power sold - average cost of supply minus average realisable revenues (ACS-ARR gap) for 2019-20 reveal that most states have seen a further worsening in their financial performance. Only five states - Assam, Goa, Gujarat, Haryana and Maharashtra - have eliminated revenue gaps in 2019-20, thus meeting the UDAY target.
     
    Jammu and Kashmir, Rajasthan, Andhra Pradesh and Telangana have the highest revenue gaps, which have which have widened further in 2019-20.
     
    A look at the data shows that revenue gap for states such as Bihar, Andhra Pradesh, Rajasthan, Tamil Nadu has increased between 60 paisa to Rs 1 per unit in FY20. This means that discoms are losing this amount on selling electricity to consumers. The gap is highest in Jammu and Kashmir at over Rs 2 per unit.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    m.prabhu.shankar

    4 weeks ago

    Better Union Govt take care of only the Union Govt responsibilities and leave the things like Electricity Generation and Distribution to state govts and in that way state govts will be made completely responsible for meeting the electricity requirements of the people of the state. De-centralization is the key to India's success. But BJP Govt is more focussed on doing the exact opposite.

    Haryana RERA Caps Brokerage to 1% for Real Estate in the State
    In a first, the Haryana Real Estate Regulatory Authority (HRERA) has approved a maximum one per cent brokerage on sale or purchase of property in the state, officials said on Tuesday.
     
    Taking cognisance of the complaints that property dealers were charging arbitrary commission both from sellers and buyers, a bench headed by HRERA chairman KK Khandelwal and comprising member SC Kush took this decision recently.
     
    For registered real estate projects, it has been decided to issue restraint orders to all promoters and brokers to refrain from charging commission more than what is prescribed as per the Haryana Regulation of Property Dealers and Consultants Rules of 2009 under the Haryana Regulation of Property Dealers and Consultants Act of 2008.
     
    Rule 10 provides 1% commission on agreed consideration value to be paid by the seller and purchaser of the property, i.e., 1/2% by each on the finalisation of the deal as per their agreement entered in the register of the dealer under valid receipt.
     
    Elaborating, Mr Khandelwal said that property dealers or brokers are indulging in malpractices in connivance with promoters and charging more than prescribed commission both from sellers and buyers.
     
    Commission as high as 5% -10% of the property value was allegedly charged by agents and the burden was ultimately shared by allottees.
     
    Accordingly, all real estate agents have been cautioned not to charge commission more than what was prescribed in the rules. Doing so would be deemed as an outright violation of the provisions of the law, he added.
     
    The bench ordered a forensic audit of accounts of nearly two dozen erring builders and brokers.
     
    Furthermore, instances have come to the notice of the Authority that some property dealers were falsely representing services of a particular standard or grade and making false or misleading representation concerning approvals for various projects.
     
    The HRERA chairman said that certain real estate agent and brokers were also involved in issuance of misleading advertisements for upcoming projects.
     
    "It has been noticed that some brokers/property dealers are indulging in sale of property in unauthorised colonies as well. A vigil is kept on such brokers so that their registrations are cancelled and criminal/civil action, as per law, initiated against them. It is mandatory for the brokers to keep the copies of relevant approvals/plans, specifications, brochures etc of projects where deals are facilitated by them," Mr Khandelwal added.
     
    The licences to brokers/property dealers are granted by deputy commissioners concerned under the Haryana Regulation of Property Dealers and Consultants Act, 2008. The registration of property dealers to negotiate/mediate real estate deals of a registered project is done by the Real Estate Regulatory Authority under Section 9 of the Real Estate (Regulation and Development) Act, 2016 and the registration is then granted subject to the condition that the real estate agent shall not contravene the provisions of any other law as applicable to him.
     
    "We have noticed that some property dealers/agents ... do not have necessary documents. They shall also be penalised, including cancellation of their registration with the Authority along with recommendation to the deputy commissioners concerned for withdrawal of their licences," he said.
     
    HRERA was in the process of prescribing a code of conduct for property dealers to make sure that they abide by such norms so that there are no unfair trade practices, said Mr Khandelwal.
     
    The code of ethics would prescribe not only additional books of accounts to be maintained by property dealers to commission charged as per the law and also records of transactions which may be perused by the Authority in case of inter se dispute between buyers and brokers.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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