Billionaires: India's biggest corporate feud between the Mistry and Tata families ends

The country's top court rules the 2016 removal of Cyrus Mistry as chairman of Tata was legal

India’s Supreme Court ruled in favour of Tata Sons in its years-long dispute with former chairman Cyrus Mistry. EPA

India’s Supreme Court ruled in favour of Tata Sons in its years-long dispute with former chairman Cyrus Mistry, 52, dealing a blow to his family that owns a stake of about 18 per cent in the nation’s biggest conglomerate.

The country’s top court said the 2016 removal of Mr Mistry as chairman of Tata was legal, rejecting his allegations of mismanagement by the group that makes products that range from salt to software and luxury Jaguar and Land Rover cars.

The court also upheld Tata’s rules on minority shareholder rights, making it difficult for investors to sell shares.

The order, which is expected to put an end to India’s biggest corporate feud, is a setback for the Mistry clan’s Shapoorji Pallonji Group, which has been seeking ways to raise cash and pay down piling debt after its businesses were hit by the pandemic.

Tata has opposed the SP Group’s proposal to borrow money against its stake in Tata Sons.

Cyrus is the son of billionaire Pallonji Mistry, 91, who controls the 155-year-old SP Group and whose net worth is about $27 billion, according to the Bloomberg Billionaires Index. Tata Sons is the holding company of the Tata Group.

“The judgment finally brings a quietus to a long legal battle,” said Ruby Ahuja, a senior partner at law firm Karanjawala & Co, who represented Tata. Mr Mistry's representatives did not immediately respond to requests for comment.

The March 26 verdict also allows the Tata group to shift its focus back to reviving some of its flagging businesses. Tata has sought to consolidate its sprawling empire and strengthen its balance sheet. The Mumbai conglomerate, which has about $113bn in annual revenue, has been looking to sell some of its hotel assets and European steel operations.

Dismissing all petitions by Mr Mistry's lawyers, a three-judge bench headed by Chief Justice Sharad Bobde left it to the two warring parties to negotiate terms of their divorce if they wish.

“The modalities of separation from the Tata Group in terms of shareholding have yet to be decided,” said Deepak Jasani, head of retail research at HDFC Securities in Mumbai. “This will be a bigger issue as far as the stock market repercussions are concerned.”

Mr Mistry worked closely with Ratan Tata, 83, chairman at the time, before he took over the top job at Tata Sons in 2012.

The bad blood between the two sides began when he sought to reduce the group’s debt. In the process, Mr Mistry threatened to undo the legacy of the conglomerate’s patriarch. He was removed four years later in a boardroom coup.

The SP Group had valued its stake in Tata at about 1.75 trillion rupees ($24bn) and sought to sell it to Tata. However, Tata rejected that valuation and instead pegged the amount at about $11bn.

Founded in 1865, the SP Group has built some of Mumbai’s landmarks, including the Reserve Bank of India building.

With businesses spanning infrastructure and home appliances, the group has been trying to offload some assets including property, road projects and a stake in home hygiene products maker Eureka Forbes to help pare debt. Two years ago, the family infused at least 6.5bn rupees and disposed of an information technology park.

Petr Kellner

The PPF Group signalled that it would push ahead with potential banking, telecoms and other corporate deals after its founder and majority owner was killed in a helicopter crash.

“All the transactions we are looking at are progressing because the strategic sense is still there,” said Jean-Pascal Duvieusart, 54, a minority shareholder in PPF and head of its financial arm, the Home Credit Group.

“Should the parties be able to agree, then it is very probable the given transaction will be executed.”

Petr Kellner, the richest Czech with a net worth of $15.7bn, died on March 27 along with four others during a heli-skiing vacation in Alaska.

Over three decades, the reclusive billionaire had turned PPF into one of the most active investment companies in central and eastern Europe, with assets in finance, telecoms, manufacturing, media and biotechnology.

PPF is trying to take over Prague-traded Moneta Money Bank and evaluating a potential sale of a minority stake in its Cetin Group unit. While the exact future ownership structure of the sprawling business empire remains unclear, analysts at Ceska Sporitelna and J&T Banka have said they expect no immediate effect on pending transactions.

Mr Duvieusart said individual parts of PPF had enough autonomy and decision-making powers to keep developing their business. He worked closely with Kellner for more than 20 years, including on the proposed combination of Home Credit’s Czech and Slovak assets with Moneta.

“I am far from saying that Petr’s personality and skills have not been instrumental in making some of the past transactions happen,” said Mr Duvieusart.

“But the primary driver of these transactions is that they make strategic sense for PPF and for the counterparty, and therefore they can move forward.”

Elon Musk

The latest sign that Elon Musk is warming up to natural gas came in the form of four tanker trucks at the construction site of Tesla’s electric-car gigafactory in Austin, Texas.

The trucks belonging to Houston liquefied natural gas company Stabilis Energy were parked outside the plant, aerial images released last week on YouTube show. Together, the 18 wheelers have the capacity to carry enough gas to power 32,000 US homes for a day.

The billionaire founder of Tesla, who has long derided the fossil fuel industry and touted renewable energy as key to averting climate disaster, is increasingly relying on gas for his projects. That had already become evident at the SpaceX launch site, also in Texas.

In January, the first sign that gas would also be used in the Austin plant, which will make the Cybertruck and other electric vehicles, was the sighting of a massive die-casting machine known as a Giga Press. Built by Italy’s Idra Group, the equipment uses gas to melt aluminium and other metals to make vehicle parts.

Tesla did not respond to requests for comment while Stabilis refused to comment.

Larry Chen

Larry Chen’s announcement that he will spend as much as $50 million of his personal fortune to buy stock in his online tutoring company GSX Techedu is already paying off.

The company’s American depositary receipts recently rose by 4.8 per cent in the US, rebounding after a series of brutal trading sessions that included a record 52 per cent two-day plunge.

GSX was among the companies exposed to the Archegos Capital Management fiasco that led to huge block sales as hedge fund trader Bill Hwang’s family office was forced to liquidate more than $20bn in equity positions.

Mr Chen, whose net worth hit $15.6bn in January, is now worth $3.7bn, according to the Bloomberg Billionaires Index. The two-day stock slide through Monday erased $3.9bn of his fortune.

The GSX founder, who is also chairman and chief executive, said he would use his personal funds to purchase as much as $50m of the Chinese company’s shares over the next year. He also clarified that he currently has not pledged any of his equity interest in GSX as security or collateral, after previously doing so.

Mr Chen, who was born in a poor village in northern China, has one of the most volatile fortunes tracked by Bloomberg.

Since GSX’s ADRs began trading in New York in June 2019, they have been whipsawed as short sellers including Muddy Waters questioned its results. GSX withstood the attacks but it disclosed in September that it was being investigated by the Securities and Exchange Commission.

In October, the stock tumbled after Credit Suisse Group downgraded it, citing increased competition for the company and “mistakes” during its summer promotion. It then recovered and hit a peak on January 27 amid a retail trading frenzy focused on highly shorted stocks.

Bets against the company have only increased since, with short interest reaching a record 75 per cent of shares outstanding at the end of last week, according to IHS Markit data.