Why Does TATA Want Its Valuation To Be Lower?

Tata Group and Shapporji Pallonji Group are in feud ever since October 2016, when Cyrus Mistry was ousted as the Chairman of Tata Sons.

The dispute came to an end in March 2021, when Supreme Court ruled in favour of Tata Group.

But the battle between the two sides is far from over.

The Mistry family controlled Shapoorji Pallonji Group still owns 18.73% in Tata Sons. Tata Sons is the holding company for the Tata group of companies.

The Mistry family has made it clear that they want to separate from Tata Sons. But the next big challenge for Mistry family would be to get the right valuation for their shares in Tata group.

While SP Group claimed that its stake in Tata Sons is worth Rs 1,75,000 crore, Tata Sons maintains that the value of SP Group’s holdings is not more than Rs 80,000 crore.

Why the difference in valuation you may ask?

The value of Tata Sons’ group companies can be easily obtained using market prices and other mutually agreed methods. It is value of other assets, especially the value of TATA brand, which could prove the most knotty.

Brand Finance has pegged Tata’s brand value at $20 billion. But this need not entitle SP Group to an 18.37% slice of it.

The brand itself is indivisible and its use is under the executive control of Tata Sons. What part of it can SP Group claim is quite a conundrum!

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