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Shapoorji Pallonji Group Exits Tata Group, Says Separation of Interest Best for Each Party

·2-min read

Shapoorji Pallonji (SP) Group, the largest minority shareholder in Tata Group, is all set to part ways with it. The company in a statement on Tuesday said it "believes that a separation of interests would best serve all stakeholder groups".

In a statement, the Mistry group, which owns 18.5% stake in Tata Sons, said a separation from the Tata Group is necessary due to the potential impact this continuing litigation could have on livelihoods and the economy. “It was 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 statement by the SP group said.

"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.

The statement came within hours of the Tata group informing the SC that it is ready to buy out SP group stake. The Supreme Court today barred the Mistry group from pledging or selling its stake in Tata Sons and asked the Mistrys to maintain status quo until its next hearing on October 28, when it starts hearing final arguments in the case.

As the largest minority shareholder owning an 18.37 per cent stake, the role hitherto played by the SP Group, was always one of guardianship with an aim to protect the best interests of the Tata group, the group -- which is facing a financial crisis due to Corona pandemic, said. The SP Group had always used its voting rights as a shareholder for the best interest of the Tata Group.

The statement said in 2012, when Cyrus Mistry, the scion of SP group, accepted the position of Chairman of Tata Sons, it was not only with a sense of pride, but also with a sense of duty as an ‘insider’ on the Board of Tata Sons. The Tata Group was going through significant change.

A generation of Tata leaders were retiring with implications on the future governance of the Group. Several of these leaders who were retiring from the Board of Tata Sons also served as Trustees of the majority shareholders - Tata Trusts. “It is in this context that Mistry set about trying to establish a governance structure that would institutionalize accountability, and create the right checks and balances, without contravening the new SEBI Insider Trading law that regulated the flow of information across all stakeholders,” the statement said.

“Unfortunately, the impact of these actions continue to hurt minority shareholders, be it the SP Group at Tata Sons or the millions of shareholders of the listed companies in the Tata Group,” the statement said.