Pallonji set to split empire
Billionaire Pallonji Mistry may not be bowing out yet, but he’s busy finalising an important script.
By Anto T Joseph & Indrajit Gupta, TNN |
MUMBAI: Reclusive billionaire Pallonji Mistry may not be bowing out yet, but in his own quiet way, he’s busy finalising an important script: dividing his $5-billion empire between sons Shapoor and Cyrus.
Mr Mistry, ranked 10 on the 2006 Forbes’ Richest Indians list, has much of his wealth tucked away in his 18.4% stake in Tata Sons. For more than five years now, the 77-year-old patriarch has been trying to define ownership and control of this stake for his two sons without having to incur huge tax liabilities. At Wednesday’s market prices, the stake would be worth just a shade less than $4 billion.
So far, attempts at restructuring the group have remained unresolved because of the huge capital gains tax and stamp duty payouts entailed in neatly splitting the Tata Sons stake. Since Tata Sons is an unlisted company and the stake is held by a clutch of unlisted companies controlled by the Mistry family, any transfer of assets at the fair market value is certain to attract capital gains tax. For the past few months, a group of tax and real estate consultants, including CC Choksey & Co, Deloitte Haskins & Sells and KPMG, have been working hard to value the assets as well as look for a breakthrough on the tax front.
Sources said a team from Deloitte has held several closed-door meetings with the father, two sons, and Jimmy Parakh, a confidant who has been put in charge of the group’s restructuring exercise. “The whole exercise is likely to take 5-6 months. The two daughters, who have already inherited real estate properties from the father, are unlikely to get any more share from the group,” said sources.
Mr Mistry, ranked 10 on the 2006 Forbes’ Richest Indians list, has much of his wealth tucked away in his 18.4% stake in Tata Sons. For more than five years now, the 77-year-old patriarch has been trying to define ownership and control of this stake for his two sons without having to incur huge tax liabilities. At Wednesday’s market prices, the stake would be worth just a shade less than $4 billion.
So far, attempts at restructuring the group have remained unresolved because of the huge capital gains tax and stamp duty payouts entailed in neatly splitting the Tata Sons stake. Since Tata Sons is an unlisted company and the stake is held by a clutch of unlisted companies controlled by the Mistry family, any transfer of assets at the fair market value is certain to attract capital gains tax. For the past few months, a group of tax and real estate consultants, including CC Choksey & Co, Deloitte Haskins & Sells and KPMG, have been working hard to value the assets as well as look for a breakthrough on the tax front.
Sources said a team from Deloitte has held several closed-door meetings with the father, two sons, and Jimmy Parakh, a confidant who has been put in charge of the group’s restructuring exercise. “The whole exercise is likely to take 5-6 months. The two daughters, who have already inherited real estate properties from the father, are unlikely to get any more share from the group,” said sources.
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