The valuation debate between Tatas and Mistry has been brewed up. Tatas claim that Mistry’s 18.4% share in the holding Company is worth Rs. 57,000 crore, while the latter claim that it is Rs. 1.78 lakh crore.
Nawshir Mirza, former independent director on the board of Tata Power shared his views on the implications of Tata – Mistry break off. When asked about the Articles of Association of Tata sons, Mr. Mirza stated that the articles have given wide powers to the board to fix the value of shares annually.
However, since, shares have also been valued by an independent valuer, CA YH Malegam during 2016, board can’t fix any arbitrary value. This is where the whole dispute began. Mr. Mirza further expressed that Tatas want Mistry to leave as soon as possible. However, Mistry was in a hurry initially but considering the liquidity problems in his own group, he may consider selling a portion of his holding which could help him to weather the ill effects of the pandemic situation on his business and keep the rest. Mr. Mirza also discussed the implications of this ongoing tussle on all future transactions as it may invite the attention of the income tax department as to how businesses should arrive at valuation in such cases.
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