and Ratan Tata, chairman of Tata
Trusts, differed over fundraising plans of Tata
Sons just before the infamous spat between the duo erupted in October last year, documents filed before NCLT
show. There were differences over plans to take Tata
Sons private this year as well.
In June 2016, Tata
rejected a proposal by Mistry, then Tata
Sons chairman, to issue bonus shares to Tata
Sons shareholders, saying it would lead to an additional liability for the parent company. Since 2014, Tata, in fact, was of the view that Tata
Sons should issue Differential Voting Rights (DVRs) with an overseas listing so that the company can meet its obligations.
In a letter to Mistry
on June 13, 2016, Tata
said the bonus issue of Tata
Sons would lead to the additional burden of Rs 300/350 crore per annum (assuming a bonus issue of Rs 4,000 crore). Tata
was responding to a suggestion by Mistry
who suggested either selling TCS
shares to raise funds or offer bonus shares.
said any proposal to give something back to shareholders could be justified only if the company has large cash balances with no debt. “We have debated this in the case of TCS
and it was agreed by all concerned that the simplest way of doing this is to pay higher or special dividends to its shareholders, Tata
Sons does not qualify under the above parameters,” Tata
When contacted, both Tata
Sons and the Mistry
family declined to comment.
According to documents, Tata
first suggested listing Tata
Sons abroad in October 2014 with differential voting rights (DVRs) but his proposal was not supported by Mistry, who said DVRs
along with the holding company status of Tata
Sons would lead to 30 per cent discount to the actual value of assets.
replied to Tata
on June 18 that any discount of over 20 per cent over the underlying assets of Tata
Sons would be a loss of economic value to its shareholders. Mistry, whose family holds 18.5 per cent stake in Tata
Sons, said one had to look at structural ways such as putting aside a sum of money every year to do buybacks of shares if the discount widened. “We would have to do detailed disclosure of the governance at the decision-making process of the Trusts and the Tata
A listing would create pressure from shareholders for short-term results limiting the ability of the group to invest in next generation of businesses. Post listing there would be pressure to list the company locally,” Mistry
said. Many global investor bodies have denounced DVRs
as investor-unfriendly, he had said.
War of the Titans
trusts withdraw Rs 4,000 cr from Tata
Sons for tax reasons
rejects bonus share plans, says it will add to Tata