Shapoorji Pallonji Group agrees to exit Tata Sons

The Shapoorji Pallonji Group (SP Group), the largest minority shareholder in Tata Sons, on Tuesday agreed to exit from Tata Sons if it gets a fair and equitable solution. It was necessary to separate from the Tata Group due to the potential impact this continuing litigation could have on livelihoods and the economy, the SP Group told the Supreme Court.

"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," the SP Group said in a statement.

The cash-strapped SP Group owns an 18.37% stake in the Tata Sons. The Tata Sons holds the bulk of shareholding in the Tata group companies including their landholdings, tea estates and steel plants. The SP Group had always used its voting rights as a shareholder for the best interests of the Tata group.

"It is a matter of record that prior to the year 2000, when the Tata Trusts, being public charitable trusts, couldn't exercise their voting rights, the same being held by a public trustee, the SP Group voted to protect the best interests of the Tata Group," it said.

After the removal of Cyrus Mistry as Chairman of Tata Sons in 2016, the SP Group doesn't have any representation on the board of Tata Sons. On the other hand, various Tata Trusts control about 66% of the Tata Sons. Just two Tata Trusts -- Sir Dorabji Tata Trust and Sir Ratan Tata Trust -- are the two biggest shareholders of Tata Sons, with a combined stake of 51.54%.

Other than these two, another four Tata Trusts -- RD Tata Trust, Tata Social Welfare Trust, Tata Education Trust and JRD Tata Trust -- control another 13.66% of the Tata Sons. The statement by SP Group came within hours of the Tata group informing the apex court that it is ready to buy out SP group stake.

Earlier in the day, the Supreme Court restrained the Shapoorji Pallonji Group and Cyrus Mistry from pledging or transferring Tata Sons shares owned by them till October 28 when the final arguments will begin in the case.

Tata Sons had moved Supreme Court against the pledging of its shares held by the SP Group in favour of Axis Trustee Services and IDBI Trusteeship Services. The pledges were created in December 2019 and April this year — as well as a fresh move by the Mistry family-owned SP Group to pledge shares in favour of Canadian PE firm Brookfield Asset Management. The embattled SP Group has raised Rs 5,000 crore by way of debentures against pledges in favour of Axis and IDBI.