A file picture of Tata Group's Ratan Tata and, behind him, Cyrus Mistry. Mistry's tenure was a tumultuous one before he was summarily ousted. Image Credit: Getty

Mumbai: Billionaire Pallonji Mistry has sought to swap his stake in Tata Sons Pvt., which his group values at $24 billion, for shares in the listed companies of India's biggest conglomerates as the two groups move to sever ties.

The Shapoorji Pallonji Group told the Supreme Court it estimates its 18.4 per cent stake in the Tata Group's main holding company to be worth more than 1.75 trillion rupees ($23.5 billion) including valuation of the brand. It's seeking pro-rata shares in listed Tata entities, cash, or any marketable instrument in lieu.

This "largely non-cash settlement would ease pressure on Tata to raise large quantum of debt," SP Group said in a statement "Disputes over valuation can be eliminated by doing a pro-rata split of listed assets and pro-rata share of the brand."

The offer comes nearly a month after the Mistrys announced their intention to sever a 70-year relationship with the coffee-to-cars Tata empire. The family has been locked in a bitter courtroom battle with the $113 billion conglomerate as it seeks funds for its own cash-strapped businesses.

Read More

Bulking up on TCS?

Bulk of this $24 billion would probably come from Tata Consultancy Services Ltd., where SP Group estimates its shareholding translates to 13.2 per cent or about 1.35 trillion rupees at current values.

"It looks unlikely that Tatas will readily agree to this proposal," said Shriram Subramanian, founder of proxy advisory firm InGovern Research Services. Valuation of unlisted firms and the Tata brand are still unresolved, he said.


The value Cyrus Mistry is placing on his group's stake in Tata Sons

Too heavy a price

Also, by splitting the shareholding in listed companies, Tata Sons's equity in those firms will fall and in some cases may "reduce considerably leaving the listed companies susceptible to hostile takeovers," Subramanian said.

The potential disagreement over the stake value, quoted by the SP Group, is the latest chapter in a four-year-old wrangle that started with a boardroom coup in 2016 at Tata Sons. It led to the abrupt ouster of Cyrus Mistry as Tata Group chairman. Cyrus is the son of billionaire Pallonji Mistry, who controls the 155-year-old SP Group.

After succeeding Ratan Tata in 2012 as chairman of Tata Sons, Cyrus Mistry sought to reduce the conglomerate's debt in ways that threatened to undo the legacy of the Tata patriarch - who spearheaded the purchases of Jaguar Land Rover and British steelmaker Corus Group. That resulted in his removal and sparked India's worst corporate battle in recent history.