TIME TO SAY TATA
India Today|April 26, 2021
With Cyrus Mistry losing the legal battle against the Tatas, all eyes are now on the drama of the separation—how the SP Group will restructure its debt and how the Tatas will buy out the Mistrys’ stake
M.G. Arun

Nothing seems to be going right for Cyrus Pallonji Mistry, 52, the former chairman of Tata Sons and scion of the Shapoorji Pallonji (SP) Group. On March 26 this year, the Supreme Court upheld his ouster as chairman of the Tata Group in October 2016, barely three years after he had succeeded Ratan Tata at the helm of one of India’s largest private-sector conglomerates. This could mark the beginning of the end of the Mistry family’s storied association with the Tatas, an 84-year-old affair that began with Shapoorji Pallonji buying a 12.5 per cent stake in Tata Sons from the heirs of financier F.E. Dinshaw in 1936. The significance of this development is not just pecuniary; the business families were so close that Cyrus’s father, Pallonji Mistry, was once described as the ‘Phantom of Bombay House’ (the headquarters of the Tata Group) for the quiet influence he wielded over the Tata business empire.

The apex court’s judgment ends a three-plus-year battle between Cyrus Mistry—whose family, the largest shareholder in Tata Sons after Tata Trusts, owns an 18.4 per cent stake in the firm—and the Tata Group. After being ousted from the board of Tata Sons, Mistry was subsequently removed from individual company boards as well, a process that also saw the exit of supporters like Nusli Wadia, chairman of the Wadia Group, from Tata Group companies.

₹1.78 LAKH CRORE

The Mistry family’s valuation of its 18.4 per cent stake in Tata Sons

₹70,00080,000 CRORE

Tatas’ valuation of the Mistry family’s stake

₹31,035 CRORE

The consolidated debt of the SP Group in FY 2019

SOURED RELATIONSHIP

Now that the case has been closed in favour of the Tatas, the focus is on the way forward. Since it is abundantly clear that the relationship between the Tata and Mistry families has reached a nadir, it is likely only a matter of time before the two part ways, with the Mistrys selling their stake in Tata Sons to the Tatas, who have the right of first refusal.

This may prove essential—the SP Group is battling mounting debt, with its core businesses in engineering, construction and real estate having suffered during the pandemic. It has approached lenders for a one-time debt-restructuring exercise. According to ratings agency ICRA, the total debt repayment obligation in 2020-21 of Shapoorji Pallonji and Company (SPC), the flagship of the 150-year-old SP Group, is about Rs 5,320 crore on a standalone level and Rs 10,000 crore at a consolidated level. The consolidated debt of the SP Group rose from Rs 19,981 crore in FY2017 to Rs 31,035 crore in FY2019. (Cyrus’s brother, Shapoor Mistry, is the chairman of both the SP Group and SPC.)

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