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  5. Cyrus Mistry may sell a small stake in Tata Sons to save his 154-year old family businesses ⁠— but that won’t end the fight with Ratan Tata and the group

Cyrus Mistry may sell a small stake in Tata Sons to save his 154-year old family businesses ⁠— but that won’t end the fight with Ratan Tata and the group

Cyrus Mistry may sell a small stake in Tata Sons to save his 154-year old family businesses ⁠— but that won’t end the fight with Ratan Tata and the group
  • The Shapoorji Pallonji Group has to repay over half a billion dollars in loans by March 2020, and half of that amount is to a group company Sterling Wilson Solar.
  • The entire Shapoorji Pallonji Group, owned by Mistry family, is worth $20 billion whereas its about 18% stake in Tata Sons alone is worth $14 billion.

  • Even selling a small stake in Tata Sons will allow him to save the Mistry family businesses that are facing severe credit crunch.
Cyrus Mistry’s family business, the Shapoorji Pal lonji Group, have to mobilise over half a billion dollars by March 2020 to repay loans. More than half of that amount is owed to a group company Sterling Wilson Solar.

Watch: Cyrus Mistry can return as Tata Sons Chairman three years after he was thrown out by Ratan tata


And the much-needed money may come from sale of Tata Sons shares, according to sources cited by IANS. But that need not necessarily end the battle for control of the Tata Group between the Mistry family and Ratan Tata.
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The National Company Law Appellate Tribunal (NCLAT) order mandated that Tata Sons should become a ‘public limited company’ again. The Mistry family is now completely free to sell the entire stake, or part of it, in the conglomerate.


Here’s why Mistry family may decide to sell stake in Tata Sons

The cash-strapped Shapoorji Pallonji Group owes ₹2,340 crore to Sterling Wilson Solar, and the Mistry family owns both companies. When Sterling Wilson Solar went for an initial public offering (IPO) earlier this year, the family hoped to raise enough money to pay back the loans.

However, the IPO flopped, and the listing was even worse. The stock lost 7% of its value on the listing day and more than half its value since then.

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However, the family has asserted its commitment to the renewable energy company as recently as November 2019. “We want to reiterate that the request for an extension of time for the repayment of the intercompany dues does not in any way dilute our intent to honour these payments,” Mistry reportedly said.

The parent company, Shapoorji Pallonji Group⁠— which owns a lot of businesses from construction to water purifier to IT parks and ports ⁠— is in crisis. Nearly all their businesses need heavy capital investments, and therefore big loans that have to refinanced from time to time.

However, the collapse of infrastructure lending giant IL&FS in 2018 has led to a spike in borrowing costs for companies like the Shapoorji Pallonji Group. The company has nearly ₹4,000 crore (over half a billion dollars) worth loans coming up for repayment before March 2020, according to an ICRA report in May 2019.

They need money to save the family business from caving under the credit crunch, and they need it soon.

Where is the money?

The entire Shapoorji Pallonji Group is worth $20 billion whereas its stake in Tata Sons alone is worth $14 billion, according to Bloomberg data cited by Business Standard in November 2019.


The family has been exploring several options, including making Eureka Forbes public or selling stake in its engineering company Forbes to pay back the inter-company loans, the IANS reported citing sources.

However, now that the NCLAT has opened a new window, the Mistry family may save all their businesses by selling a small stake in Tata Sons while they continue their fight for control over the group, which is worth over a $100 billion.

Here’s a timeline of the legal battle between Cyrus Mistry and Tata Sons over the last three years.



That will also come with a protracted legal fight against Tata Sons at the Supreme Court and a lot of bellyaching. But considering the relief he will get from selling just small stake in Tata Sons, Mistry will have enough time and money to spend on his fight with the group.

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