As Tata firms’ marketcap sinks, investors want end to the war

Our Bureau Mumbai | Updated on January 27, 2018 Published on November 14, 2016


With a whopping ₹80,000-crore of marketcap wiped out in Tata Group companies, small and institutional investors want Tata Sons and Cyrus Mistry to bury the hatchet and look for a long-term solution to their dispute.

Senior executives representing institutional investors told BusinessLine that they urged Tata Sons to find a solution to the dispute soon.

“We met the top leadership at the Tata Group and expressed our concerns. We need clarity on several issues,” said an official on conditions on anonymity since the discussions were private.

Institutional investors will play a key role in the coming days as the Tata Group has called for EGMs of boards of several companies, including Tata Steel and Tata Motors, seeking shareholders’ nod to oust Mistry and Nusli Wadia.

According to an analysis by Stakeholders Empowerment Services, a corporate governance advisory firm, different scenarios are possible depending on how the various stakeholders vote.

Where non-promoter investor participation remains same and all non-promoters vote against the resolution, the Tatas can face defeat in Tata Steel, Tata Motors, Tata Power and Tata Chemicals, unless retail investor vote en masse in favour of the resolution.

If LIC and other insurance companies vote in favour of the resolution, only in Tata Motors do the Tatas face defeat if other investors’ step up against the resolution.

If LIC abstains, and if all shareholders oppose the resolution, it may be defeated in all companies except TCS.

Even if LIC votes in favour, the resolution can still be defeated in Tata Motors, Tata Chem and Tata Global while in Tata Steel and IHCL it may be a touch and go.

If LIC votes against in all companies, the resolution would be defeated across the board except TCS .

“The key for victory for either side lies in participation of investors and on whose side institutions vote including LIC,” SES said in a note, adding that independent directors need to explain to the stakeholders their divergent views to remove all doubts about the events that have unfolded since the boardroom coup on October 24.

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Published on November 14, 2016
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