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SP Group to separate from Tatas
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SME Times News Bureau | 23 Sep, 2020
The largest shareholder in the Tata Group, SP Group said before the
Supreme Court on Tuesday that a separation from the Tatas is necessary.
The
SP Group stated before the Supreme Court that a separation from the
Tata Group is necessary due to the potential impact this continuing
litigation could have on livelihoods and the economy.
They stated
that 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 current situation has forced
the Mistry family to sit back and reflect on the past, present and
possible future for all stakeholders.
"The past oppressive
actions, and the latest vindictive move by Tata Sons that impact the
livelihoods of the wider SP Group community leads to the inexplicable
conclusion that the mutual co-existence of both groups at Tata Sons
would be infeasible. 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 group said in a
statement.
As the largest minority shareholder owning an 18.37%
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 SP Group had always used its voting rights as a shareholder
for the best interest of the Tata Group, it added.
SP Group said
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.
SP Group said that
in 2012, when Cyrus Mistry 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.Unfortunately, he was removed in October 2016, when he
attempted to implement these governance reforms", the group added.
It
is extremely unfortunate that the current leadership of Tata Sons has
not only continued to take value destructive business decisions in a
misguided effort to prove a point in these proceedings.
SP Group
said that it is a matter of public record that several issues identified
years earlier, continue to plague the group. Whether it is the
operations of Tata Steel UK, where over the last three years alone the
operational losses have increased by an additional 11,000 crores, or the
Group's aviation businesses.
These actions, or lack thereof,
have meant that the total debt in the major Tata group companies has
increased by approximately Rs 1 lakh crores in the last three years.
Excluding TCS, the last quarters losses of all the listed group companies of approximately 14,000 crores causes great concern.
"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", SP Group said.
It said that
Tata Sons has amplified its institutional efforts to suppress and
inflict irreparable harm on the SP Group, in the midst of a global
crisis triggered by the COVID Pandemic. The 150 year old SP Group - is
the second largest construction group in the country, executing projects
of national significance in India and abroad.
"The Mistry family
were in the midst of raising funds against the security of their
personal assets to meet the crisis arising from the global pandemic.
This move was undertaken to protect the livelihoods of its 60,000
employees and over 100,000 migrant workers. The action by Tata Sons to
block this crucial fund raise, without any heed for the collateral
consequences is the latest demonstration of their vindictive mind-set",
it said.
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