Cash-strapped SP Group may lose bargaining power post SC verdict
Tata Sons Ltd’s ousted chairman Cyrus Mistry’s family-promoted Shapoorji Pallonji (SP) Group, which controls popular household brand Eureka Forbes and is primarily engaged in the construction business, can be legally compelled to sell its 18.37% stake in Tata Sons at a fair value likely to be decided by Tata Sons if it chooses to invoke Article 75 of its Articles of Association ( AoA).
This puts the cash-strapped SP Group on weak ground when it is desperately trying to monetize the stake to shore up its finances, according to legal experts. The Supreme Court on Friday left it to the two sides to decide on further course of action in the matter, but senior lawyers maintained that Tata Sons can indefinitely stall SP Group’s attempts to monetize its stake by an outright sale or through raising of debt by pledging the stake.
The SP Group had asked the top court to allow a separation of the group’s ownership interest through the 18.37% stake in Tata Sons by extinguishing the shares held by SP Group in lieu of a fair compensation or equities of listed Tata group companies.
